 "HCLTech strong on charts: HDFC Securities suggests Bull Spread Strategy")
Derivative Strategy
Bull Spread Strategy on HCLTech
Buy HCLTech (November 30 Expiry) 1320 Call at Rs 14.95 and simultaneously sell 1360 Call at Rs 4.55
Lot Size: 700
Cost of the strategy: Rs 10.4 (Rs 7,280 per strategy)
Maximum profit: Rs 20,720 if HCLTech closes at or above Rs 1,360 on November 30 expiry.
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Breakeven Point: Rs 1,331
Risk Reward Ratio: 1:2.85
Approx margin required: Rs 32,000
Rationale:
>> Long build up is seen in HCLTech Futures on Thursday where Open Interest rose by 12 per cent (Prov) with the stock rising by 2.9 per cent.
>> Stock price has broken out from the downward sloping trendline, adjoining the highs of Sept 18, 2023 and Nov 1, 2023.
>> Oscillator like RSI and MFI are in rising mode and placed above 60 on the daily chart, indicating strength in the stock.
>> Technology stocks are looking good on the short to medium term charts.
Note : It is advisable to book profit in the strategy when ROI exceeds 20 per cent.
Disclaimer: Nandish Shah is Senior Derivative & Technical Analyst, HDFC Securities. Views are his own. He does not hold any positions in the stock mentioned above.
Disclaimer: Nandish Shah is Senior Derivative & Technical Analyst, HDFC Securities. Views are his own. He does not hold any positions in the stock mentioned above.