Derivatives strategy on Havells by Nandish Shah of HDFC Securities

The stock price has broken down from the upward sloping trendline

Buy Havells NOVEMBER 650 Put at Rs 12.3 & simultaneously SELL 620 Put at Rs 3.30 (Lot Size 1,000)

Cost of the strategy Rs 9 (Rs 9,000 per strategy).

Maximum profit Rs 21,000 If Havells closes at or below 620 on November expiry.

Break even Point Rs 641

Rationale:

-- Short build up is seen in the Havells Futures’ yesterday, where we have seen 5 per cent rise in Open Interest with price falling by 3 per cent.
 

-- Stock price has broken down from the upward slopping trendline, adjoining low of 31-July, 23-August, 20-September and 25-October 2019.

-- Stock price is in clear downtrend where it is trading below its all important moving averages

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