Monday, January 11, 2016

Safe option for Jet Airways

The outlook for Jet Airways ( Rs.747) appears positive. It faces a hurdle at Rs.806 and support at Rs.646. A close above Rs.921 will change the long-term outlook to positive. In that case, Jet Airways can rally above Rs.1,380.

F&O pointers: 

Jet Airways accumulated 37.57 lakh shares in open interest. Trading in option indicates the stock could face resistance at Rs.800 and support at Rs.700.


Traders could consider a bull-call spread on Jet Airways. This can be initiated by buying Rs.760-call (premium of Rs.29.35) and simultaneously selling the Rs.780-call, which closed with a premium of Rs.21.5.

This strategy will cost an initial outflow of Rs.7,065 (or Rs.7.85 a contract) for traders and that could be the maximum loss one can incur.

For that to happen, shares of Jet Airways will have to close at or below Rs.760 at the time of expiry.

A maximum profit of Rs.10,935 is possibleTraders could hold the position till expiry or if the underlying stock moves above Rs.780. In the event of the stock failing to sustain the current momentum, traders can exit the position with a loss of Rs.4,500.

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