Buy NTPC 175 Call, advises Amit Gupta

Amit Gupta of ICICIdirect told CNBC-TV18, "Among the largecaps, we should target PSU banking space because the private banking stocks have already participated. But what we are seeing in State Bank of India (SBI) and Bank of Baroda (BoB) kind of stocks, the tier I stocks in PSU banking are is a very clear accumulation pattern. If you look at the historical volatility of State Bank of India, we have seen it has come down from 52 percent to almost 32 percent. So that is a clear sign that when it was coming down from Rs 262 to Rs 250 there was a clear buying which was happening in the stock." "The Call positions are getting shifted to 280 Strike in this particular series. So, our sense is that the stock is moving towards Rs 280 or beyond in the coming days. So, we are initiating a buying position in this. This series is going to expire on 23rd, so one strategy that one can look at is in such kind of a stock can start writing the lower Put options also. So, 240 or 250 Put options of SBI can also be written. 250 Put is available around Rs 4.50 to Rs 5 of premium, so one can start writing that also," he said. "In the power space, NTPC for the first time in the last four or five years has started trading for such a longer period of time. So, that gives confidence that the stock is getting ready for some more action on the higher side. 175 Call Options writers are already closing their positions and their positions are getting shifted to higher Strikes." "In future segment, we have seen almost 56 percent of short closer in the last two or three series. In fact when it moved above Rs 165, there was almost 10 percent of short covering we saw from December to January. So, we have initiated a buy call in 175 Call Options for the February series in NTPC which is around Rs 5-6 and we are looking for a target of Rs 14 in this."