Nandish Shah recommends a Bull spread strategy on LIC Housing Finance

The derivative analyst from HDFC Securities recommends buying Buy LICHSG FINANCE FEB 410 CALL and simultaneously selling 430 CALL

Bull spread Strategy on LIC HOUSING FINANCE

Buy LICHSG FINANCE FEB 410 CALL at Rs 10.7 & simultaneously sell 430 CALL at Rs 5
Lot Size 2000
Cost of the strategy Rs 5.7 (Rs 11,400 per strategy)
Maximum profit Rs 28,600; If LIC Housing Fin closes at or above 430 on 24 Feb expiry

Breakeven Point Rs 415.7

Rationales:

• We have seen long build up in the LIC Housing Finance future where we have seen 2 per cent addition (Prov) in Open Interest with price rising by 2.7 per cent.
   
• Stock price has broken out on the daily chart from the downward sloping trendline, adjoining the highs of 19-Oct-21 and 03-Feb-2022.
  

 

Primary trend is bullish as stock price is trading above all important short and medium term moving averages.
 

Oscillators like RSI and MFI is placed above 60 and sloping upwards on the daily chart, indicating strength in the current uptrend.

Disclaimer: Nandish Shah is Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.