Nandish Shah of HDFC Securities suggests 'Bull Spread' strategy on Syngene

 

1) Buy Syngene (28-Nov Expiry) 920 Call at Rs 22.5 & simultaneously sell 960 Call at Rs 9

 

Lot Size: 1,000 

Cost of the strategy: Rs 13.5 (Rs 13,500 per strategy)

  Maximum profit: Rs 26,500 If Syngene closes at or above Rs 960 on 28 Nov expiry.

  Breakeven Point: Rs 933.5

  Risk Reward Ratio 1: 96

  Approx margin required: Rs 32,000

 

Rationale:

 

-- Long build up is seen in the Syngene Futures, where we have seen 2 per cent rise in the open interest with price rising by 0.82 per cent.

  -- Short term trend of the Syngene remains strong as it is placed above its 5. 11 and 20 day EMA.

  -- Stock price has broken out from the downward sloping trendline, adjoining the highs of 16-Sept and 24-Oct 2024

 

-- RSI Oscillators is in rising mode and placed above 60 on the daily chart, indicating strength in the current uptrend.

 

(Disclaimer: Nandish Shah is a senior technical/derivative analyst at HDFC Securities. Views expressed are his own.)