Underperformance should continue in M&M: Trivedi

Amit Trivedi, Director of Fin Stream Financial Advisors feels underperformance should continue for some time in Mahindra & Mahindra (M&M)
 
Trivedi told CNBC-TV18, “Since the diesel decontrol news came out and slightly before that M&M has been moving from around Rs 940 levels down to around Rs 885-890 levels on Friday. We think this underperformance should continue for some time. In fact, investors can play this underperformance by executing a ratio trade on M&M.”
 
“Investors can buy at 920 strike call, at around Rs 7.5 and sell two 940 strike calls at around Rs 8. So you get around Rs 0.5, which translates to Rs 250 per contract on a margin of 35,000. You are making at least 0.8 percent and if there is a small relief rally in M&M, you tend to benefit more because you have bought 920 strike call options,” Trivedi added.