Bull Spread Strategy on Pidilite Inds by Nandish Shah of HDFC Securities

Pidilite Sept futures have seen long build up, the open interest has increased by 18 per cent with 5 per cent rise in price.

Buy PIDILITE SEPT 2360 CALL at Rs 56 & simultaneously sell 2400 CALL at Rs 41

Lot Size 500

Cost of the strategy Rs 15 (Rs 7500 per strategy)

Maximum profit Rs 12500 If PIDILITE closes at or above 2400 on 30 Sept expiry.

Breakeven Point Rs 2375

Rationale:

• We have seen long build up in the Pidilite Futures during the Sept series till now, where we have seen 18% rise in the Open Interest with price rising by 5%.
   
• Stock price has broken out on the weekly chart to close at all time high levels.
   
• Stock price is forming bullish higher top higher bottom formation on the weekly chart.
   
• Short and medium-term trend of the stock is positive where stock price is trading above its 5, 20 and 50 day EMA. 
   
• RSI and MFI Oscillators are placed above 60 and slopping upwards, Indicating strength in the current uptrend.

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