Buy Power Finance Corporation 170 Call; Hexaware may test Rs 525: Amit Gupta

Amit Gupta, Head- Derivatives at ICICIdirect told CNBC-TV18, "We have observed in the last few sessions that the midcap IT has started picking up. So there was a lot of valuation catch-up exercise which is happening now in this space."

"Hexaware Technologies has already performed. We are seeing a significant cut of open interest which is a short covering trade. For the last one year this stock was within Rs 420-450-460 kind of band. In yesterday's session there was 17 percent of short closure. So our sense is some more pullback is possible in it, it can move towards Rs 520 or Rs 525. So, one can look at this particular stock on the higher side," he said.

"We are giving buy Call option on Power Finance Corporation because we have seen that Rural Electrification Corporation (REC) has performed much higher than PFC. Looking at the positions, it is possible of another cut or open interest is possible towards this expiry. We have already seen 5 percent of cut in the series, so that means reduction of short position which can lead the stock towards Rs 175 or Rs 180 towards this particular expiry."

"So we are buying 170 Call where the implied volatility (IV) are subdued because that is around 14-15 percent looking at the stock volatility or the surge it can move towards 18-19 percent which can take the premiums much higher in PFC. So these are two stocks from buying Call option."