Analyst recommends 'Bull Spread' on Torrent Power; check detailed analysis

Nandish Shah of HDFC Securities has shared Bull Spread' on strategy on Torrent Power stock

Bull Spread strategy on Torrent Power by Nandish Shah of HDFC Securities

• Buy TORRENT POWER (24-Feb Expiry) 1420 CALL at ₹42 & simultaneously sell 1450 CALL at ₹31
• Lot Size 425
• Cost of the strategy ₹11 (₹4675 per strategy)
• Maximum profit ₹8075 If TORRENT POWER closes at or above 1450 on 24 Feb expiry.
• Breakeven Point ₹1431
• Risk Reward Ratio 1:1.73
• Approx margin required ₹21,000

Rationale:

• Long build up is seen in the Torrent Power Futures where we have seen sharp rise in OI with price rising by 0.90 per cent.
• Torrent Power stock price has broken out on the weekly and monthly chart with higher volumes.
• Primary trend of the stock is positive as it is placed above its important moving averages.
• 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.)