I have bought one lot of Adani Enterprises 2400-strike call for ₹57.25. What is the outlook for this?
Anish Das
Adani Enterprises (₹2,152.65): The stock has been in a bearish trend since June last year. The attempts to recover over the last few months failed as the 20 and 50-day moving averages acted as resistance, preventing a rally beyond these averages.
With this background, the stock was largely charting a sideways trend since early February. But this sideways movement took the stock back to the 20 and 50-DMAs, which have again triggered a fall.
The stock saw a considerable sell-off over the last couple of sessions, which has dragged it below a support at ₹2,250. This has opened the door for another leg of decline. While the nearest support is at ₹2,000, given the current momentum, the downtrend might go well beyond this level.
Even if there is a recovery from ₹2,000, the stock surpassing your strike price of ₹2,400 is highly unlikely. Hence, given the current chart set-up, we suggest exiting the call option long.
As the trend is bearish, you may consider buying puts. If you decide to do so, our recommendation would be to buy a March expiry contract.
I am holding February 27 expiry Nifty Bank call option. Should I hold the same or should I book loss as I am facing 300 points loss?
Avinash
Nifty Bank (49,099): The index, which confirmed a double bottom chart pattern in the first week of this month, could not extend the rally and depreciated. Although there is a support at 48,800; it should rally past 50,000 to turn the outlook bullish.
Refer to the F&O Tracker section for more analysis on Nifty Bank futures and options.
Simply put, the prevailing price action does not provide a definite direction on the next trend. Hence, you may exit the call option for now. From next time on, please provide us details like strike price and purchase price.
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