F&O Strategy: Nandish Shah recommends a Bull Spread on L&T for July expiry

The technical analyst from HDFC Securities recommends buying L&T 1700 Call and simultaneously selling 1800 Call of the July expiry.

BULL SPREAD Strategy on Larsen & Toubro (L&T)

Buy L&T (28-July Expiry) 1760 CALL at Rs 25.30 & simultaneously sell 1800 CALL at Rs 11.30 Lot Size 300

Cost of the strategy Rs 14 (Rs 4,200 per strategy)

Maximum profit Rs 7,800 if L&T closes at or above Rs 1,800 on 28 July.

Breakeven Point Rs 1,774

Rationales:

• We have seen long build up in the Larsen futures on Thursday, where we have seen 12 per cent addition in Open Interest with price rising by 2.7 per cent.
   
• Stock price has broken out the daily chart where it closed at highest level since 11- April 2022.
   
• The stock price has broken out from the downward sloping trendline, adjoining the highs of 18 January and 08 July 2022.
   
• 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.
   
• Plus DI is trading above minus DI while ADX line is placed above 25, indicating momentum 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.