F&O Trading: Adopt Bull Spread strategy on Apollo Hospital

Nandish Shah of HDFC Securities recommends to Buy Apollo Hospital 5400 CALL and simultaneously sell 5600 CALL of the November series.

Derivative Strategy

BULL SPREAD Strategy on APOLLO HOSPITAL

Buy APOLLO HOSPITAL (30-Nov Expiry) 5400 CALL at Rs 93 & simultaneously sell 5600 CALL at Rs 37

Lot Size: 125

Cost of the strategy: Rs 56 (Rs 7,000 per strategy)

Maximum profit: Rs 18,000; If APOLLO HOSPITAL closes at or above Rs 5,600 on 30-Nov expiry.

Breakeven Point: Rs 5,456

Risk Reward Ratio: 1:2.57

Approx margin required: Rs 23,000

Rationale:

Long build up is seen in the APOLLO HOSPITAL Futures on Thursday where Open Interest rose by 10 per cent (Prov) with stock rising by 3.7 per cent.

Stock price has broken out from the downward sloping trendline, adjoining the highs of 28-July and 29-Sept 2023

RSI Oscillator is in rising mode and placed above 60 on the daily and weekly chart, indicating strength in the stock.

Hospital stocks are looking good on the short to medium term charts.

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

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