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HomeFinanceF&O Strategy: Nandish Shah recommends a Bull Spread on L&T for July...

F&O Strategy: Nandish Shah recommends a Bull Spread on L&T for July expiry




BULL SPREAD Strategy on Larsen & Toubro (L&T)



Buy L&T (28-July Expiry) 1760 CALL at Rs 25.30 & simultaneously sell 1800 CALL at Rs 11.30 Lot Size 300


Cost of the strategy Rs 14 (Rs 4,200 per strategy)


Maximum profit Rs 7,800 if L&T closes at or above Rs 1,800 on 28 July.


Breakeven Point Rs 1,774


Rationales:


  • We have seen long build up in the Larsen futures on Thursday, where we have seen 12 per cent addition in Open Interest with price rising by 2.7 per cent.

  • Stock price has broken out the daily chart where it closed at highest level since 11- April 2022.

  • The stock price has broken out from the downward sloping trendline, adjoining the highs of 18 January and 08 July 2022.

  • Oscillators like RSI (11) and MFI (10) are in rising mode and placed above 60 on the daily chart, indicating strength in the current uptrend.

  • Plus DI is trading above minus DI while ADX line is placed above 25, indicating momentum 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.


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First Published: Fri, July 22 2022. 08:08 IST



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