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F&O Strategy: Buy SBI Cards Call Option

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The stock of SBI Cards and Payment Services (₹840.3) is ruling at a crucial level. The stock finds support at ₹808 and ₹744. A close below the latter will turn the outlook negative. On the other hand, resistance levels are at ₹880 and ₹981. A close above the latter will trigger a fresh rally in the stock. We expect the stock to maintain the positive trend in the short term and has a high possibility of breaching ₹1,000.

F&O pointers: Rollover to September month was 83 per cent, which was less than previous months, as some traders squared-off their long positions. However, SBI Cards September futures closing with a healthy premium at ₹844.60 and October futures at ₹846.55 against the spot price of ₹840.30, signal existence of long positions.  Option trading indicates that the stock could move in a ₹800-900 range.

Strategy: Buy 850-call on the stock, which closed with a premium of ₹19.60. As the market lot is 800 shares, this strategy will cost traders ₹15,680. This would be the maximum loss and that will happen if SBI Cards fails to move past ₹850. We advise traders to hold the position for at least two weeks. Initial stop-loss can be placed at ₹7.5.

If SBI Cards opens on a positive note and premium moves up to ₹25, stop-loss can be shifted to ₹22.50. Traders can aim for an initial target of ₹30.

Follow-up:  Last week, we recommended a calendar put-spread strategy on Apollo Hospitals. The position is in-the-money. Hold for one more week.  Traders can hold Wipro 415-call (recommended previous week calendar bull-call spread spread).

Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading





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