The outlook for the stock of Kalyan Jewellers India (₹730.50) remains positive. Immediate resistance is at ₹754. A close above this can trigger a fresh rally. Conversely, the stock finds its nearest support at ₹685 and ₹655.
As long as the stock rules above ₹540 there is no threat to the bullish outlook. We expect the stock to maintain the momentum in the short-term.
F&O pointers: As the counter is recently included in the derivative segment, there is little trading history. Kalyan Jewellers’ Dec futures closed at ₹734.60 against the spot price of ₹730.50, signalling the existence of long positions. Option trading indicates that the stock could move in the ₹700-800 range.
Strategy: Consider a bull-call spread on Kalyan Jewellers. Initiate by selling 740-strike call and simultaneously buying 730-strike call. These options closed with a premium of ₹23.40 and ₹28.25 respectively. The strategy will cost traders ₹4.85 per lot. As the market lot is 775 shares, the net outflow would be ₹3,758.50, which is the maximum loss. For that to happen, Kalyan Jewellers has to close at or below ₹730.
On the other hand, a profit of ₹3,991.25 is possible if the stock crosses ₹740. Hold the position for at least two weeks, if the profit is not achieved before that.
Follow-up: We recommended buying 1,000-call on LICI. Hold on to the position and can be reviewed next week. Those who initiated LICI long futures, too, can continue to hold with strict stop loss as mentioned.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading