July 21, 2023

Options & Equity strategies: Tata Motors

Blog | F&O

TATAMOTORS is all set to announce its June quarter results on 25 July. The stock closed at ₹621.65 on 20 July.

Interested in trading options?

Let's understand what a straddle is.

Long straddle: A trader will buy a Straddle if he or she believes that shares of Tata Motors will be volatile before 27 July 2023.

(It is constructed by buying ATM call and put options of the same expiry & same strikes)

Short straddle: A trader will sell a Straddle if he or she believes that shares of Tata Motor would not be volatile before 27 July 2023.

(It is constructed buy selling ATM call and put options of the same expiry & same strikes)

Now, let’s find out critical levels for trading TATAMOTORS options contract

The premium for 620 CE (ATM call option) is ₹14.00
The premium for 620 PE (ATM put option) is ₹11.45
When we add these, we get the expected movement (up or down) from the current price. In this case it's 25.45 or ±4.0% of 621.65
That means the upper range is 647.10 and the lower range is 596.2

Deploying straddle for TATAMOTORS contract

For options traders, earnings announcements provide an opportunity to trade on the volatility.

Deploy a Long Straddle if you believe TATAMOTORS will move more than (±4.0%)

Deploy a Short Straddle if you believe TATAMOTORS will move less than (±4.0%)

Interested to know more about straddles? Check out our UpLearn education content. If you want to see more historical earnings price data like in the table above for this stock, sign-up for our community, let us know, and we will share it!

Disclaimer

Investments in the securities market are subject to market risk, read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. To know more visit https://upstox.com/

Derivatives trading must be done only by traders who fully understand the risks associated with them and strictly apply risk mechanisms like stop-losses. The information is only for consumption by the client and such material should not be redistributed. We do not recommend any particular stock, securities and strategies for trading. The stock names mentioned in this article are purely for showing how to do analysis. Take your own decision before investing.