Bull Spread strategy on M&M Financial by Nandish Shah of HDFC Securities

Short term trend of the stock has turned positive as it closed above its 10-and 20-day EMA

Buy M&M FIN 160 CALL at Rs 5.10 and simultaneously sell 170 CALL at Rs 2.40
 

Lot Size: 4000
 

Cost of the strategy: Rs 2.7 (Rs 10,800 per strategy)
 

Maximum profit: Rs 29,200 if M&M Financial closes at or above 170 on 30 Sept expiry
 

Breakeven Point: Rs 162.7

Rationale:
 

> We have seen a long build-up in M&M Fin Futures, with a 16% (Prov) rise in the Open Interest and price rise by 6%.

> Stock price has broken out from the downward sloping trendline, adjoining the highs of 15-June-2021, 14-July-2021 and 06-Aug-2021 with higher volumes.

> Short term trend of the stock turned positive when it closed above its 10-and 20-day EMA.

> RSI and MFI Oscillators are placed above 50 and slopping upwards, indicating strength in the current uptrend

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