Option strategy of the day | Havells volume breakout signals ‘buy’

The Havells stock has broken out of a falling channel, with substantial volumes supporting an upward bias. Derivative expert recommends a buy 1,520 Call option (CE) strategy to capture the upside momentum.

Technical chart of Havells showing volume breakout | Source: Stoxbox

Avdhut Bagkar, Derivatives and Technical Analyst at StoxBox,  said despite having a minor negative buildup, the Havells scrip is not favouring bearish bias.

“Despite the price action signalling profit booking on Monday, the momentum is yet to display a weak bias. Altogether, 63 lakhs OI changed hands, with price formulating a per cent decline at the start of the current week, the strength continues to favour upside bias,” Bagkar said.

“Technically, the stock has a breakout of falling channel, with substantial volumes to support the upside bias. Going forwards, 1,500 -1,450 designates an accumulation range for a medium-term positive bias. Immediate support emerges at the 1,500 mark. “

On the derivative front, 1600 CE and 1500 PE strikes are observing writing pressure, exhibiting a broad trading range for the upcoming sessions, he said. A major move over 1600 could garner a trend to 1665 to 1690 levels.
“The overall bias remains positive as the highest concentration in 1600 CE and 1550 CE highlights accumulative stance,” he said.

Derivative strategy recommended by Bagkar

Position: Buy 1520 CE in the range of Rs 40–45

Stop loss: Rs 20

Target: Rs 80 and 100 levels.

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