Hero moto — large trend

SwingGun Updated   
Hero motor is forming dark cloud cover in the short term (intraday) and has lot of downside in the weekly time frame.

Hero at CMP of 2650 has a lot of downside, given the steel excise-duty (news driven) rally after it's poor quarterly results.

Both their topline and bottom line were hit.

People are not buying hero motor bike; 24% decline in sales.

Net profits (bottom line) was hit by 30%.

Bearish outlook at the current market price, until next results. Results this poor have shown to plummet giants like Target and Amazon by unforeseen amounts.

While steel prices will give them more margin to work with; until sales improve in the next quarter, hero motor price action will explore 2300 levels. Not bullish on this stock until 2300 spot price.

Safe strategy: Sell up to two calls (CE) at spot price 2750 / 2700 / 2650 today, and hold for the rest of the month and eat premium.
Trade active:
Auto index is down .4%, HERO is up about 1% for the day.

Selling CE right now.
Trade active:
Hero spot price is down 0.2%, auto nifty is down about 0.75%, lot of downside.
Trade closed manually:
Hero spot closed 1% down yesterday. Maruti corrected several percent from it's peak, two days back. Stress in nifty-auto sector.

For today, could be a good idea to wait for stock to go up 50 points or so, and sell call (CE) when it is 2650 spot price.

If price falls 50 points rather than going up 50, would be prudent to wait for another entry, rather than chase falling price.
Will post ideas here.
Trade active:
Nifty auto is below key level 11000.

Outlook for hero motor: bearish.

Today is expiry, you can sell call and eat premium; if premium is dead, sell call (CE) in next series and eat premium.
Hero motor Futures premium (difference from spot price) should be roughly 4 rupees (as observed over time).

Lot of premium in futures and general scope for placing shorts on Hero motor, today (while Nifty auto stays below key level 11000)
Trade active:
Nifty auto down 1%, Hero motor down 0.25%, lot of downside at current market price
Trade active:
Spot price is decent for selling call (CE) at 2640 mark. New month, fresh premium to eat (daily earning of 800/- if you hold for entire month)
Hero motor closed at okay price for selling call at 2640 mark. You might get better opportunity for selling call at higher premium tomorrow.

Note that bearish movement to spot price 2350 or 2300 is on weekly time frame.
Trade active:
Accumulate one more CE (sell CE) at this point, auto index is falling.
Hero motor fundamentally not a buy at this price, accumulate selling CE as you find opportunities.

Target: spot price 2350

Note that Hero motor contributes about 10 percent of auto nifty. If auto nifty is holding just because of hero motor, it is out of line and will correct with market forces, sooner or later.

Only good sales in next results can change this outlook.
Trade active:
Selling CE (call option) for 2640 still good.

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