F&O Strategy: Nandish Shah recommends a Bull spread on FSL

The derivative analyst from HDFC Securities recommends buying FSL April 140 Call and simultaneously selling 150 Call.

Bull spread Strategy on FSL

Buy FSL APRIL 140 CALL at Rs 5.50 & simultaneously sell 150 CALL at Rs 2.80

Lot Size 2,600

Cost of the strategy Rs 2.70 (Rs 7,020 per strategy)

Maximum profit Rs 18,980 If FSL closes at or above 150 on 28 April expiry.

Breakeven Point Rs 142.7

Rationale:

• We have seen long build up in the FSL future where we have seen 6 per cent addition (Prov) in Open Interest with price rising by 2.7 per cent.
   
• Stock price has broken out on the daily chart with higher volumes where it closed at highest level since 15-Feb.
   
• Short term trend of the stock is positive as it is trading above its 5 and 20 day EMA. 
   
• Momentum Oscillators like RSI and MFI is placed above 60 and sloping upwards on the daily chart, Indicating strength in the current uptrend.

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