indiamarketoutlook

TATA Motors: Has been in the 5th gear... Roadblock ahead at 280

NSE:TATAMOTORS   TATA MOTORS LTD
Tata Motors
CMP 270

The stock has seen a stupendous rally....

we observe two gaps in the region around 280...once while going up and the 2nd while coming down....

Going forward, 282-288 zone could be a crucial resistance level to watch out for...

Given the set up one may Consider

selling Feb expiry 310 Call option around 10
& buy 330 Call Option around 6

Lot size 5700

As the lot size is quite large, the strategy would reduce the cost drastically and give decent return potential...

Max profit potential Rs 22800/- per strategy lot

In built loss protection for a rise in price up to 314 on 25 Feb 2021

Take care & safe trading...!!!

Disclaimer:

- The view expressed here is my personal view
- Past performance is not a guarantee for future predictions
- Use this for educational purpose
- Any decision you take, you need to take responsibility for the same
- It's your hard earned money. Treat it wisely
- Trade / Invest keeping in mind your trading style, goals and objectives, time horizon & risk tolerance
- if trading in F&O, understand that F&O trading involves risk
- Do take proper risk management measures
- Do your own analysis and consult your financial adviser if need be

Comment: Strategy update
310 Call option CMP 42 ( Sold at 10)

330 Call option CMP 30 ( Bought at 6)

Book profits in 330 Call option
We adjust that 24 points in 310 Call option

Our breakeven now is 320+24 = 344


Take care & safe trading...!!!
Comment: Tata Motors Closing Price 331

When Tata Motors was at 270, we had initiated a Bear Call spread strategy
where we sold 310 Call option at 10 and bought 330 Call option at 6

310 Call Option Closing Price 36 (Sold at 10)
Loss of 26 points

330 Call option - Booked profits in morning at 30 ( Bought at 6)
Profit of 24 points

Loss in overall strategy so far 2 points...

Despite Tata Motors trading 61 points above and we being at the wrong side of the trade in F&O, our strategy is in loss by 2 points only...

This is where strategies play a vital role.... Managing our risk when we are at the wrong side of the trade...
Trade closed: target reached: Tata Motors CMP 319

Tata Motors is up 49 points when we initiated the Bear Call Spread position.

A normal Futures short would have made a loss of Rs 2,79,300/-

With this background in mind, let us look at our strategy now

Strategy update

310 Call CMP 26.5 ( Sold at 10)
Loss of 16.5 points

330 Call option - Booked profits at 30 on 3rd Feb (Bought at 6)
Profit of 24 points

Net Profit 5700*(24-16.5) = Rs 42750 / -

We are in profit ( more than we had targeted for ) despite being at the wrong side of the trade... The stock movement was not in our favour but our strategy kept us in the game and today we have come out from the position with profits...

Happy trading...!!!