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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.
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.
