 "F&O: A bull spread strategy for M&M Finance may be suitable for Sept series")
BULL SPREAD Strategy on M&M FINANCE
Buy M&M FINANCE (28-Sept Expiry) 300 CALL at Rs 8.45 & simultaneously sell 310 CALL at Rs 4.95
Lot Size: 4,000
Cost of the strategy: Rs 3.50 (Rs 14,000 per strategy)
Maximum profit: Rs 26,000 if M&M Finance closes at or above Rs 310 on 28 Sept expiry.
Breakeven Point: Rs 303.5
More From This Section
Risk Reward Ratio: 1:1.86
Approx margin required: Rs 42,100
Rationale:
>> Short covering was seen in M&M Finance Futures on Thursday where Open Interest fell by 1 per cent (Prov) with it rising by 2.50 per cent.
>> The stock price is on the verge of breaking out from the downward sloping trendline, adjoining the highs of July 3 and August 31, 2023.
>> The stock price formed bullish hammer candle stick pattern on September 6.
>> RSI Oscillators is sloping upwards and is placed above 50 on the daily chart, indicting strength in the stock.
>> RSI Oscillators is sloping upwards and is placed above 50 on the daily chart, indicting strength in the stock.
Note : It is advisable to book profit in the strategy when ROI exceeds 20 per cent.
==============================
Disclaimer: Nandish Shah is senior derivatives & technical research analyst at HDFC Securities. He doesn't hold any position in the stock/index. Views are personal.
==============================
Disclaimer: Nandish Shah is senior derivatives & technical research analyst at HDFC Securities. He doesn't hold any position in the stock/index. Views are personal.