Analyst recommends 'Bull Spread' on Tata Steel; check detailed analysis
Nandish Shah of HDFC Securities has shared Bull Spread' on strategy on Tata Steel stocks
 "Analyst recommends 'Bull Spread' on Tata Steel; check detailed analysis")
Bull Spread strategy on Tata Steel by Nandish Shah of HDFC Securities
- Buy TATA STEEL (24-Feb Expiry) 195 CALL at ₹4.5 & simultaneously sell TATA STEEL 200 CALL at ₹3
- Lot Size 5500
- Cost of the strategy ₹1.5 (₹8250 per strategy)
- Maximum profit ₹19,250 If Tata Steel closes at or above 200 on 24 Feb expiry.
- Breakeven Point ₹196.5
- Risk Reward Ratio 1: 2.33
- Approx margin required ₹36,500
Rationale:
- Long build up is seen in the Tata Steel Futures where we have seen sharp rise in OI
- with price rising by 2.5 per cent.
- Tata Steel stock price has broken out on the weekly and monthly chart.
- Stock price has been forming bullish higher top higher bottom formation on the
- weekly and monthly charts.
- Amongst the Options, put writing is seen at 180-184 level, suggesting limited
- downside in the stock.
- Momentum Indicators and Oscillators are showing strength in current uptrend.
(Disclaimer: This article is by Nandish Shah, senior technical/derivative analyst, HDFC Securities. View expressed are his own.)