12 Jun , 2024 By : Debdeep Gupta
CanFin Homes stock is in a higher high, higher low formation on daily charts and is trading above all important short-term moving averages, supporting the up-move.
According to Avani Bhatt, Vice President of Derivative Research at JM Financial, "It has given a breakout above the weekly resistance of 765, with a target set at 835."
To capture this upside momentum, Avani suggests a covered call strategy:
Strategy: Buy June futures at Rs 791 and sell June 790 CE at Rs 22
Target: Profit Rs. 17,500
Stop Loss: Below 765 (Spot level)
Margin Required: Rs.1,95,500
Profit Potential: 9 percent
Derivative Outlook
In the derivatives market, long additions were noted in futures as the combined open interest increased by 2 percent, while June futures alone witnessed a strong short covering of 5 percent.
"Implied volatility of the 800 strike calls for the June series noted a surge, hinting at buying interest building up, which is a positive sign," said Bhatt.
Bhatt notes that given the range-bound consolidative price action in the index, some minor consolidation may trickle down into stocks as well. "Hence, we recommend a covered call strategy for the stock to mitigate risk and maintain a balanced approach," said Bhatt.
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