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Here's a Bull Spread Strategy on L&T Finance by HDFC Securities

Short term trend of the stock is positive where stock price is trading above its 5 and 20-day SMA

Topics
L&T Finance | Derivative trading | Market technicals

Nandish Shah  |  Mumbai 

Stock price has broken out from the downward slopping trendline on the daily chart
Stock price has broken out from the downward slopping trendline on the daily chart

Bull Spread strategy on L&T Finance

Buy L&T Fin Oct 65 CALL at Rs 2.85 & simultaneously sell 75 Call at Rs 0.60

Lot Size 6800

Cost of the strategy Rs 2.15 (Rs 14620 per strategy)

Maximum profit Rs 53380 If L&T fin closes at or above 75 till October expiry.

Breakeven Point Rs 67.15

Rationale:

  • Long build up is seen in the L&T fin Futures’ where we have seen 11%(Prov) rise in the Open Interest with Price rising by 4%.
  • Stock price has broken out from the downward slopping trendline on the daily chart
  • Short term trend of the stock is positive where stock price is trading above its 5 and 20-day SMA
  • RSI Oscillator is placed above 50 level, Indicating strength in the stock
  • +DI is trading above Minus DI while ADX is placed above 20, indicating strength in the uptrend
=================== Disclaimer: Nandish Shah is Technical Research Analyst at He doesn't hold any position in the stock.

Views are personal.

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First Published: Mon, October 05 2020. 08:14 IST
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