Derivative strategy on NBCC by HDFC Securities

Derivative strategy by Nandish Shah, Senior Technical & Derivative Analyst, HDFC Securities.

Bear Spread strategy on NBCC

Buy NBCC July 52 Put at Rs 1.40 & simultaneously sell 49 Put at Rs 0.40.
 

Lot Size: 8500
 

Cost of the strategy Rs 1 (Rs 8500 per strategy)
 

Maximum profit: Rs 17,000 if NBCC closes at or below 48 on July expiry
 

Breakeven Point: Rs 51

Rationale:

-- Short build up is seen in the NBCC Futures’ yesterday, where we have  seen  sharp  rise  in Open Interest with price falling by 3.8 per cent.
 

-- Stock price has broken down from the upward slopping trendline, adjoining the low of 14-Feb-2019, 16-May-2019 and 08-July 2019.
 

-- Stock  price  is  trading  below  its  5,  20  and 200 day SMA Indicating weakness in the stock.
 

-- Oscillators  and Momentum Indicators like RSI and MACD showing weakness in the stock on the daily and weekly charts.