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Option strategy on Tata Steel by Chandan Taparia of MOSL

A hold above 630 could take the stock towards 640-645 zones

Chandan Taparia  |  Mumbai 

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Option strategy: (BULL CALL SPREAD)
 
BUY 1 LOT OF 630 CALL

SELL 1 LOT OF 640 CALL
BEP: 633.50
MAX RISK: 3.50 POINTS (Rs 7000/-)
MAX REWARD: 6.50 POINTS (Rs 13000/-)
 
Rationale:
 
1.     Positive sector outlook with sustained buying at every small decline
2.     It has been making higher top – higher bottom on weekly chart and given a decent weekly close
3.     A hold above 630 could take the stock towards 640-645 zones
4.     Fresh Put writing at 620 strike suggests limited downside
5.     Call unwinding in 620 and 640 strike suggests an up move
6.      Thus low risk Bull Call Spread is recommended
 
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.

First Published: Tue, August 22 2017. 08:02 IST
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