Bull Spread strategy on Dr Reddy's Labs by Nandish Shah of HDFC Securities

Bull spread Strategy on Dr Reddy's Labs 

Buy DR REDDY'S MARCH 4,600 Call at Rs 182 & simultaneously sell 4,800 Call at Rs 106 

Lot Size: 125 

Cost of the strategy: Rs 76 (Rs 9,500 per strategy) 

Maximum profit: Rs 15,500 If Dr Reddy's closes at or above 4,800 on March 25 expiry. 

Breakeven point: Rs 4,676 

Rationale: 

-- Long build-up was seen in the Dr Reddy Futures’ where we have seen 4 per cent (Prov) rise in the Open Interest with price rising by 1 per cent. 

-- The stock price has broken out on the daily chart where it closed above 200-day EMA with higher volumes. 

-- The stock price has formed double bottom around 4,380-odd levels 

-- 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.