F&O: Bull Spread Strategy on L&T by Nandish Shah of HDFC Securities

Bull spread Strategy on LARSEN

Buy LARSEN Dec 1900 CALL at Rs 31 & simultaneously sell 1940 CALL at Rs 17

Lot Size 575

Cost of the strategy Rs 14 (Rs 8050 per strategy)

Maximum profit Rs 14950 If Larsen closes at or above 1900 on 30 Dec expiry.

Breakeven Point Rs 1914

Rationale:

• We have seen long build up in the Larsen Futures, where we have seen 5%(Prov) rise in the Open Interest with price rising by 3%.
   
• Stock price has broken out on the daily chart to close at highest level since 23-Nov.
   
• RSI and MFI Oscillators are placed above 60 and sloping upwards, indicating strength in the current uptrend.
   
• Capital goods as a sector looking good on the chart.
  
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Disclaimer: Nandish Shah is Senior Derivatives and Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.