In Monday’s session, the stock broke above its resistance level on heavy volumes, which could suggest a possible bullish momentum for the stock.
“If the price manages to close above the Rs 14,000 level, it could potentially hit the near-term targets of Rs 16,000 and Rs 17,000,” said Mandar Bhojane, derivatives analyst at Choice Broking.
Technically, on the daily chart, the stock is positioned well above all its significant short-term, medium-term and long-term exponential moving averages (EMAs). In the recent past, the stock’s 50-day EMA has acted as its strong and significant support.
Additionally, the Relative Strength Index (RSI) is currently at 68.5 and is trending higher, indicating increasing buying momentum.
“On the downside, immediate support lies at Rs 13,000, which can be considered an opportunity to buy on dips,” Bhojane added. Options data further suggests that the highest concentration of Put (PE) open interest is at the strike price of Rs 13,000, indicating that this level could serve as immediate support. On the contrary, the highest Call (CE) open interest is at the strike price of Rs 15,000, which the stock has already surpassed. Bhojane believes that break above the Rs 15,000 level could trigger short covering, which could propel the stock higher, and hence suggests implementing a Broken Wing Options Strategy to win with the bullish stance.
Broken wing
The broken wing options strategy, specifically the broken wing butterfly (BWB), is a variation of the classic butterfly options strategy. It is designed to take advantage of directional market movements while reducing risk and cost. The term “broken wing” refers to the intentional imbalance of one of the butterfly’s wings, which creates a skewed risk/reward profile.
This strategy reduces the initial cost or builds credit while limiting both risk and reward on one side of the trade, and is typically used to capitalize on small directional moves with defined risk.
(Prices as of September 16)
Below is the strategy results chart:
ETMarkets.com(Fountain: Brokerage of choice)
(Disclaimer:The recommendations, suggestions, views and opinions of the experts are their own and do not represent the views of The Economic Times.
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