F&O strategy: Bull Call Spread Strategy on M&M by HDFC Securities

The stock price of M&M has broken out on the daily chart where it closed at highest level since 22-Sept 2022

BULL SPREAD Strategy on M&M
 

Buy M&M (24-Nov Expiry) 1,300 CALL at Rs 42 & simultaneously sell 1,340 CALL at Rs 25

Lot Size 700

Cost of the strategy Rs 17 (Rs 11900 per strategy)

Maximum profit: Rs 16,400 if M&M closes at or above 1,340 on 24 Nov expiry.
 

Breakeven Point: Rs 1,317
 

Approx margin required: Rs 43,000
 

Rationale:

• We saw long build up in the M&M futures on Thursday, where we saw 45 per cent addition (Prov) in Open Interest with price rising by 1 per cent.
   
• The stock price has broken out on the daily chart where it closed at highest level since 22-Sept 2022.
   
• The stock price has formed strong base around 1,200 levels by taking support on multiple occasions around those levels
   
• Momentum Oscillators like RSI (11) and MFI(10) are in rising mode, and placed above 60 on the daily chart, indicating strength in the current uptrend.
  
   

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