F&O Strategy: Analyst suggests Bear Spread for Hindustan Aeronautics stock

F&O strategy: Short-term trend of the Hindustan Aeronautics turned weak, while it is positive for LIC Housing Finance

Derivative Strategy

Bear Spread Strategy on Hindustan Aeronautics

Buy HAL (31-July Expiry) 4,800 Put at ₹112 and simultaneously sell 4,600 Put at ₹38

• Lot Size: 150
• Cost of the strategy: ₹74 (₹11,100 per strategy)
• Maximum profit Rs 18900 If HAL closes at or below 4600 on 31 July expiry.
• Breakeven Point: ₹4,726
• Risk Reward Ratio: 1:1.70
• Approx margin required: ₹25,000

Rationale:

• Short build up is seen in the HAL Futures where OI rose by 6 per cent with price falling by 2 per cent.
• Short term trend turned weak as it is placed below its 5, 11 and 20 day EMA
• Stock price has broken down on the daily chart with higher volumes.
• Momenutm Indicators and Oscillators are showing weakness in the stock.

READ STOCK MARKET LIVE UPDATES TODAY 

Bull Spread Strategy on LIC Housing Finance

Buy LIC HOUSING (31-July Expiry) 640 Call at ₹12.3 and simultaneously sell 660 Call at ₹5.3

 

• Lot Size: 1,000
• Cost of strategy: ₹7 (₹7,000 per strategy)
• Maximum profit: ₹13,000 if LIC HOUSING closes at or above ₹660 on 31 July expiry.
• Breakeven Point: ₹647
• Risk Reward Ratio: 1:1.86
• Approx margin required: ₹33,500

Rationale:

• Long build up is seen in the LIC Housing Futures during the July series till now, where we have seen 9 per cent rise in open interest with price rising by 2.60 per cent.
• Short term trend remains positive, as the stock price is placed above its 5,11 and 20 day EMA.
• Primary trend is positive as the stock price is placed above its 100 and 200 day EMA.
• Oscillators like RSI and MFI are in rising mode and placed above 60 on the daily chart, indicating strength in the current uptrend.