Why Is Eicher Motors Holding Its Uptrend Despite Recent Consolidation?
What Traders Should Know About Support Levels And Option Positioning
Eicher Motors has sustained a long-term uptrend, with the recent rally beginning in early August from the ₹5,375 support. After making an intra-month high of ₹7,122.50 in September, the stock entered a consolidation phase — not a bearish reversal — which often reflects healthy digestion after a strong move higher.
Price action shows near-term supports at ₹6,860 and ₹6,750. As long as these levels hold, the structural uptrend remains intact and bulls retain control. Sideways corrections after big rallies typically suggest that accumulation is taking place rather than distribution.
When evaluating option exposure during consolidation, consider risk-managed strategies. To understand practical hedging and stop-loss frameworks for options, see guidance in Nifty Tips, which explain position sizing and exit discipline for near-expiry contracts.
Given the bullish inclination and nearby supports, a resumed upswing toward ₹7,200 is plausible in the near term. Traders who prefer directional exposure can maintain long option positions, but must prepare for premium decay as October expiry approaches and for the possibility of a prolonged consolidation that compresses option value.
For the existing 7,000-call option that closed at ₹109.65, risk management is key. If you hold this contract, a reasonable target given a rally to ₹7,200 could be a premium near ₹200; a more conservative working target is ₹160. However, premium can fall sharply with time decay or a minor correction, so allocate a disciplined stop-loss as advised below.
Practical trade management: place an initial stop-loss on the option premium at ₹50 to protect against rapid theta erosion or adverse moves. If price action confirms renewed momentum and volatility rises, consider trailing the stop to protect gains. Avoid increasing position size near expiry without a clear structural breakout above new highs.
To balance caution with opportunity, explore tactical templates such as partial profit-taking at predefined premium levels and hedging with nearer-dated puts. For actionable templates and checklists tailored to options traders, review insights in Nifty Tip and BankNifty Tip.
If consolidation stretches or a corrective leg emerges, option premiums may compress quickly. Monitor spot support at ₹6,860/₹6,750 and adjust stops promptly. Remember that time decay accelerates as expiry nears, so active management is essential for short-duration option bets.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, observes that Eicher Motors remains in a constructive long-term trend while consolidating. Option holders should use disciplined stop-losses (suggested ₹50 on the 7,000-call) and avoid adding size near expiry. Watch ₹6,860 and ₹6,750 as the key supports that validate the bullish thesis.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
