F&O Strategy: Nandish Shah recommends Bull Spread on Larsen & Toubro

The derivative analyst from HDFC Securities recommends to Buy L&T 2100 Call and simultaneously Sell 2160 Call of the 29-December expiry.

Derivative Strategy

Bull Spread Strategy on Larsen & Toubro (L&T)

Buy L&T (29-Dec Expiry) 2100 Call at Rs 40 & simultaneously sell 2160 Call at Rs 20

Lot Size 300

Cost of the strategy Rs 20 (Rs 6,000 per strategy)

Maximum profit Rs 12,000; If L&T closes at or above Rs 2,160 on 29-Dec expiry.

Breakeven Point Rs 2,120

Approx margin required Rs 27,500

Rationale:

• We have seen long rollover in the Larsen futures on Thursday, where we have seen 28 per cent addition (prov) in Open Interest with price rising by 1.7 per cent.
   
• The stock price has broken out on the daily chart where it closed at highest level since 17-Jan 2022.
   
• 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.
   
• Plus DI is trading above minus DI while ADX line is  placed above 25, indicating momentum in the current uptrend.

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