Derivatives strategy by HDFC Securities: Buy Manappuram Finance Jan Futures

Bull Spread strategy on MANAPPURAM FINANCE

Buy Manappuram Finance January 185 Call at Rs 5.25 & simultaneously sell 200 call at Rs 1.25

Lot Size 6,000

Cost of the strategy Rs 4 (Rs 24,000 per strategy)

Maximum profit Rs 66,000 If Manappuram Finance closes at or above 200 on January expiry.

Break even Point Rs 189

Rationale:

-- Long build up is seen in the Manappuram Finance Futures’ where we have seen rise in the Open Interest with price moving up by 4%.

-- Stock price has broken out on the daily chart by closing above the resistance level of 181.5 to close at all time high with higher volumes.

-- In the option segment, we have seen 48 per cent addition in 190 strikes Call Option, suggesting Call buying.

-- Oscillator and momentum Indicators like RSI and MACD have been showing strength on the daily and weekly charts.