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Published on 6/11/2020 1:02:02 PM | Source: ICICI Direct

Derivatives Strategy – Covered Call Buy Tata Steel Ltd For Target Of Rs. 460 - ICICI Direct

Posted in Broking Firm Views - Short Term Report| #Tata Steel Ltd #Trading Report #ICICI Direct #Steel

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Covered Call strategy: Buy Tata Steel for target of Rs. 460…

* With the Nifty moving to its highest levels since February, broad based participation was visible in the market. Tata Steel, which has been a relative underperformer vis-à-vis other stocks, was able to find support near its major Put base of 400 strike. It is likely to move towards | 450 levels in coming sessions

* The open interest in Tata Steel has increased sharply in the last couple of months and is currently the highest seen in it in more than a year. We believe shorts were attempted in the stock while sustainability of current levels should trigger short covering towards | 450 levels

* The highest Call base of the stock for the November series was at 420 strike. As the stock is able to move above these levels, a round of short covering is likely to be seen towards the next major Call base of | 450

Covered Call strategy: Buy Tata Steel for target of 460…

Covered Call strategy is formed by creating a long position in future along with selling an ATM/OTM Call of the same expiry. Option traders can also sell Call options of the underlying shares if they hold it in Demat (same quantity) to bring down the costing. It’s a limited reward strategy generally formed when moderate upsides are expected. Stop-loss has to be placed to limit the losses in case of sharp reversal on downsides

Buy Tata Steel Ltd @ 418-422 TGT 460 SL 395.5

 

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