This stock offers good opportunity to initiate covered call strategy

Tata Consumer Products has been breaking out of the 16-day tight range. The stock is in an uptrend and currently, consolidating in a resting period. The tight range breakout will have an impulse move. In the present scenario, where the overall market conditions are weaker, we can apply a covered call strategy to minimise the losses in case of a movement against our position in the stock. As we are bullish on the stock, we can buy it in the futures segment above Rs 681, which is a breakout level. The immediate resistance is at Rs 710. To protect the position, we can hedge the future long position by selling out-of-the-money call of 710 strikes as we feel this could be a resistance level in the near term.    

The break-even point is Rs 661.  If the stock closes below Rs 660, the loss would be Rs 2,430 but if it closes anywhere above Rs 700, the profit is likely to be Rs 51,500.  

The 710 CE has enough liquidity to trade while the capital required to apply this strategy is Rs 2,80,000.