Deploy Bear Put Spread strategy in Tata Steel: Amit Gupta

Amit Gupta, Head- Derivatives, ICICI Direct advice traders to create Bear Put Spread in Tata Steel June series.

Gupta told CNBC-TV18, “Tata Steel, if one looks at the steel packet has generally outperformed the non ferrous metals and in fact the market also before because we saw in the last couple of months Tata Steel was holding the base around Rs 450-460 and during this period we saw that lot of long positions were added in the stock. They were also rolled to the next series and finally now in this particular series we are seeing there is a continuous closure of positions the longs are slowly exiting the stock in that instant bounce back from Rs 398 levels to Rs 420 again we saw that the long liquidation is again happened around Rs 420 that dragged the stock to below Rs 400 again in the last session.”
He further added, “This particular feature does not board well with the stock. We should remain short and looking at the volatility in the underlying I think its better to you form a bear put spread where one can buy the June 400 put option which is available somewhere around Rs 18-19 and go short in 360 put option of the June series which is available around Rs 7-8 so if you hold on this position for 20-25 days I think you will eventually make money in the stock.”