F&O Strategy: Nandish Shah recommends Bull Spread Strategy on HCL Tech

The derivative analyst from HDFC Securities recommends buying HCL Technologies 1020 Call and selling 1040 Call of the October series.

Derivative Strategy

BULL SPREAD Strategy on HCL Technologies

Buy HCLTECH (27-Oct Expiry) 1020 CALL at Rs 9.30 & simultaneously sell 1040 CALL at Rs 3.80

Lot Size 700

Cost of the strategy Rs 5.50 (Rs 3,850 per strategy)

Maximum profit Rs 10,150; If HCL Tech closes at or above Rs 1,040 on 27-Oct expiry.

Breakeven Point Rs 1,025.50

Approx margin required Rs 29,000

Rationales:

• We have seen long build up in the HCL Tech futures on Wednesday, where we have seen 30 per cent addition (Prov) in Open Interest with price rising by 2.2 per cent.
   
• The stock price has broken out on the daily chart where it closed at its highest level since 09-June 2022.
   
• Primary trend of the Stock turned positive as stock price closed above 200-day EMA, after April 2022.
   
• Momentum Oscillators like RSI (11) and MFI(10) are in rising mode and placed above 60 on the weekly chart, indicating strength in the current uptrend.

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