 "F&O trade: Derivatives strategy on Larsen & Toubro for Jan monthly expiry")
Derivative Strategy by Nandish Shah of HDFC Securities
BULL SPREAD Strategy on Larsen & Toubro
- Buy LT (27-Jan Expiry) 4,200 CALL at ₹45 and; simultaneously sell 4,300 CALL at ₹17
- Lot Size 175
- Cost of the strategy ₹28 (₹4,900 per strategy)
- Maximum profit ₹12,600 If Larsen closes at or above 4300 on 27 Jan expiry.
- Breakeven Point ₹4,228
- Risk Reward Ratio 1:2.57
- Approx margin required ₹25,000
Rationale:
- Short covering is seen in the Larsen & Toubro Futures where we have seen fall in OI with price rising by 1 per cent.
- Larsen & Toubro stock price has broken out on the daily chart to close at all-time high.
- Amongst the Options, put writing is seen at 4100-4120 level, suggesting limited downside in the stock.
- Momentum Indicators and Oscillators are showing strength in current uptrend.