Sell Titan Industries 250 Call of August Expiry

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This month's trading idea germinates from the market favorite Titan Industries. The company reported disappointing result for the first quarter of the current fiscal due to slowdown in jwellery business. The company is trading at expensive valuation of around 30 times based on FY-13 EPS which limits any substantial upside for the stock in the short term. Hence option traders can sell 250 call option of august expiry at the current market premium of 0.95.

Total return from the strategy

Assuming 1 lot of Titan Industries (1 lot = 1000) is sold at Rs 0.95
Total premium collected = 1000 * 0.95 = Rs 950
Total Transaction cost assuming Brokerage cost including STT and other taxes at Rs. 50 per lot = Rs 50
Margin money required: Rs. 35,000
Total return = 900 / 35,000 = 2.6% in 20 days

Risk: If the stock moves past 250.95 and closes above this level then there will be a loss of Rs.1000 for every point above 250.95.


Amit Agarwal said...

The premium is down to 20 paise. Let the call expire to pocket maximum return of 2.6%

Happy Trading

Amit Agarwal said...

As expected the stock has corrected to 220 levels and the 250 call premium is reduced to 5 paise. Let the call expire.

Congrats to all who took position based on this recommendation.


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