Bull spread strategy on Cholamandalam Finance by HDFC Securities

Buy CHOLA FIN MAY 670 CALL at Rs 17.5 and simultaneously sell 700

CALL at Rs 7.10

Lot Size: 1,250

Cost of the strategy: Rs 10.4 (Rs 13,000 per strategy)

Maximum profit: Rs 24,500 If Chola Fin closes at or above 700 on May 27 expiry

Breakeven Point: Rs 680.4

Rationale:

-- We have seen aggressive long build up in the Chola Fin Futures where we have seen 35 per cent (Prov) rise in the Open Interest with price rising by 5 per cent.
 

-- Stock price has broken out from the downward slopping trendline on the daily chart by adjoining the highs of April 30 and May 7, 2021.

-- Primary trend of the stock is positive where it is trading above all important moving averages.

-- RSI Oscillators is showing strength 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.