Derivatives strategy on M&M by HDFC Securities

Derivative strategy on M&M by Nandish Shah, Assistant Vice President, PCG, HDFC Securities.

Buy M&M March 680 call option at Rs 15

Stop loss of Rs 11

Target Rs 23

Rationale:

• A long build-up is seen in the M&M Futures’ during the March series till now where we have seen a sharp rise in Open Interest with M&M rising by 4 per cent.
• The stock gave a bullish breakout on the daily chart yesterday by closing above the resistance level of 665 with higher volumes to close at a one-month high.
• M&M stock formed double bottom around 615 levels last month and reversed northwards, indicating a bullish trend reversal.
• The stock is trading above its 5 and 20 day SMA, indicating a positive trend for the short to medium term.
• Momentum Indicators and Oscillators like RSI and MACD are showing strength in the stock.