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Derivative Strategy
BULL SPREAD Strategy on UBL
Buy UBL (28-MARCH Expiry) 1700 CALL at Rs 51.7 & simultaneously sell 1800 CALL at Rs 19.5
Lot Size 400
Cost of the strategy Rs 32.2 (Rs 12,880 per strategy)
Maximum profit Rs 27,120; If closes at or above Rs 1,800 on 28-March expiry.
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Breakeven Point: Rs 1,732.2
Risk Reward Ratio: 1:2.11
Approx margin required: Rs 23,800
Rationale:
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Long build up is seen in the UBL Futures where we have seen 29 per cent rise in Open interest with price rising by 2.17 per cent.
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The stock price has formed bullish engulfing pattern on the daily chart with rise in volumes.
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The stock price has been taking support at 200-day EMA since last few months.
- RSI Oscillator has come out from the overbought zone which Indicates higher possibility of a bullish trend reversal.
Note: It is advisable to book profit in the strategy when ROI exceeds 20%.
Disclaimer: Nandish Shah is Sr. Derivatives & Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.
