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Here's a derivative strategy from HDFC Securities for Tata Steel

Views on derivative call by Nandish Shah, Senior Technical & Derivative Analyst, HDFC securities.

Nandish Shah  |  Mumbai 

Tata Steel
Tata Steel

Bear Spread strategy on TATA STEEL

Buy Put August 430: Put at Rs 14 & simultaneously sell 410 Put at Rs 8.

Lot Size: 1061.

Cost of the strategy: Rs 6 (Rs 6366 per strategy)

Maximum profit: Rs 14854 if closes at or below Rs 410 on August expiry.

Break-even point: Rs 424

Rationale:

-- Short build up is seen in the Futures’ yesterday, where we have seen sharp rise in Open Interest with price falling by 1.27%.

-- Stock price has broken down from the bearish cup and handle pattern on the daily chart where it closes at two year low.

-- Stock price has been forming lower top lower bottom on the daily charts.

-- Stock price is trading below its 5, 20 and 200 day SMA Indicating weakness in the stock.

-- Oscillators and Momentum Indicators like RSI and MACD showing weakness in the stock on the daily and weekly charts.

First Published: Fri, July 26 2019. 07:43 IST
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