F&O Strategy: Nandish Shah recommends Bull Spread on PowerGrid Corp

The derivative analyst from HDFC Securities recommends to Buy PowerGrid 222.50 Call and simultaneously Sell 230 Call for the March expiry.

Derivative Strategy

BULL SPREAD Strategy on POWERGRID

Buy PowerGrid (29-March Expiry) 222.5 CALL at Rs 4.5 & simultaneously sell 230 CALL at Rs 2

Lot Size: 2,700

Cost of the strategy: Rs 2.50 (Rs 6,750 per strategy)

Maximum profit: Rs 13,500; If PowerGrid closes at or above Rs 230 on expiry day.

Breakeven Point: Rs 225

Approx margin required: Rs 21,000

Rationale:

• Long build up is seen in the PowerGrid Future, where we have seen 18 per cent addition in Open Interest with price rising by 1 per cent.
   
• Short term trend of PowerGrid turned bullish as stock price closed above its 5 and 20 day EMA.