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Bull spread Strategy on Apollo Tyres
Buy APOLLO TYRES APRIL 240 CALL at Rs 9 and simultaneously sell 255 CALL at Rs 4
Lot size: 5,000
Cost of the strategy: Rs 5 (Rs 25,000 per strategy)
Maximum profit: Rs 50,000 If APOLLO TYRE closes at or above 255 on 29 April expiry.
Breakeven point: Rs 245
Rationale:
-- Long build-up was seen in the Apollo Tyres Futures’ where we have seen 6 per cent (Prov) rise in the Open Interest with price rising by 5.5 per cent.
-- Stock price has broken out on the daily line chart where stock price closed at highest level since March 12 with higher volumes
-- Short-term trend of the stock turned positive after the stock price closed above its 5,20- and 50-day EMA
-- Oscillators like RSI and MFI are showing strength in the stock
Disclaimer: Nandish Shah is Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.
