Nandish Shah recommends Bear Spread on Dabur for the March expiry

The derivative analyst from HDFC Securities recommends to Buy Dabur 530 Put option and simultaneously Sell 525 Put of the March series.

Derivative Strategy

Bear Spread Strategy on Dabur India

Buy Dabur (29-March Expiry) 530 PUT at Rs 8.6 & simultaneously sell 520 PUT at Rs 5.2

Lot Size 1,250

Cost of the strategy Rs 3.40 (Rs 4,250 per strategy)

Maximum profit Rs 8,250; If Dabur closes at or below Rs 520 on 29-March expiry.

Breakeven Point: Rs 526.6

Approx margin required Rs 23,000

Rationale:

• Short build up is seen in the Dabur Future, where we have seen 3 per cent addition in Open Interest with price falling by 1 per cent.
   
• Dabur Future price has broken down on the daily chart to close at lowest level since October 2022.
   
• Short term trend of Dabur remains bearish as stock price is trading below its 5- and 20- day EMA.
   
• RSI oscillator is placed below 40 and going downwards on the daily chart, indicating strength in the current downtrend.

Note: It is advisable to book profit in the strategy when ROI exceeds 20 per cent.

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