F&O Strategy: Nandish Shah recommends a Bull Spread on Lupin

The technical analyst from HDFC Securities recommends buying Lupin 700 Call and simultaneously selling 720 Call for the August series.

Derivative Strategy

BULL SPREAD Strategy on LUPIN

Buy LUPIN (25-August Expiry) 700 CALL at Rs 15 & simultaneously sell 720 CALL at Rs 8

Lot Size 850

Cost of the strategy Rs 7 (Rs 5,950 per strategy)

Maximum profit Rs 11,050 if LUPIN closes at or above 720 on 25 August expiry.

Breakeven Point Rs 707

Approx margin required Rs 26,000

Rationale:

• We have seen long build up in Lupin futures during the August series till now, where we have seen 30 per cent addition (Prov) in Open Interest with price rising by 7 per cent.
   
• The stock price has broken out on the daily chart where it has closed at its highest level since May 17, 2022.
   
• The short-term trend of the stock is positive as stock price is trading above its 5- and 20-day EMAs.
   
• The RSI(11) oscillator is in rising mode and placed above 60 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.