Here's why HDFC Securities recommends a Bull spread on IDFC February series

According to Nandish Shah of HDFC Securities, primary trend is bullish as the stock price is trading above all important short and medium term moving averages.

Bull spread Strategy on IDFC Ltd

1) Buy IDFC Ltd February 67 CALL at Rs 2.75 and simultaneously sell 70 CALL at Rs 1.75

Lot Size 10,000

Cost of the strategy Rs 1 (Rs 10,000 per strategy)

Maximum profit Rs 20,000 if IDFC Ltd closes at or above 70 on 24 Feb expiry.

Breakeven Point Rs 68

Rationale:

• We have seen long build up in the IDFC Ltd future in the Feb series till now where we have seen more than 20 per cent addition in Open Interest with price rising by 6 per cent.
• Stock price has broken out on the monthly chart from the downward sloping trendline, adjoining the highs of March-2015 and July-2021.
• Primary trend is bullish as the stock price is trading above all important short and medium term moving averages.
• RSI Oscillators is placed above 60 and sloping upwards on the weekly chart, indicating strength in the current uptrend.

Disclaimer: Mr. Nandish Shah, Senior Derivative & Technical Analyst, HDFC securities. Views personal