Today’s Option Strategy: Muthoot Finance Futures Show Increase in Buying with Long Unwinding

Muthoot Finance, a leading player in the financial sector, is making waves in the market with increased buying interest in the May series. The cumulative open interest in futures has seen a rise of 0.53 percent, indicating a positive sentiment towards the stock.

Options matrix analysis suggests a strong support base forming at the levels of 1,600 and 1,660, while there is observed long unwinding in call writing positions at 1,700. Avani Bhatt, Senior Vice President of Derivative Research at JM Financial, has recommended a bull call ratio spread strategy on Muthoot Finance to capitalize on this momentum.

The recommended strategy for the May series involves buying 1 lot of Muthoot Finance 1700 CE at Rs 50-52 and selling 2 lots of Muthoot Finance 1,780 CE at Rs 25-27. This strategy offers a maximum profit potential of Rs 40,000 in the range of Rs 1,720-1,780 with zero downside risk and a margin requirement of Rs.131,000.

The technical view on Muthoot Finance is also positive, with the stock bouncing back from its weekly support level of Rs 1,655. Futures have witnessed long addition, and a move above the previous day’s high of Rs 1,686 could trigger a short-covering rally towards the recent high of Rs 1,730-1,750.

As of 11:05 am on May 8, Muthoot Finance is trading at Rs 1,677. Investors are advised to consult with certified experts before making any investment decisions. Stay updated with the latest business news and expert opinions on Moneycontrol for informed investment choices.