Bull spread strategy on Apollo Tyres by Nandish Shah of HDFC Securities

The stock price has broken out on the daily line chart where it closed at highest level since March 12 with higher volumes

Bull spread Strategy on Apollo Tyres

Buy APOLLO TYRES APRIL 240 CALL at Rs 9 and simultaneously sell 255 CALL at Rs 4

Lot size: 5,000

Cost of the strategy: Rs 5 (Rs 25,000 per strategy)

Maximum profit: Rs 50,000 If APOLLO TYRE closes at or above 255 on 29 April expiry.

Breakeven point: Rs 245

Rationale:

-- Long build-up was seen in the Apollo Tyres Futures’ where we have seen 6 per cent (Prov) rise in the Open Interest with price rising by 5.5 per cent.

-- Stock price has broken out on the daily line chart where stock price closed at highest level since March 12 with higher volumes

-- Short-term trend of the stock turned positive after the stock price closed above its 5,20- and 50-day EMA

-- Oscillators like RSI and MFI are showing strength in the stock

Disclaimer: Nandish Shah is Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.