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Here's a Bull Spread Strategy on Max Financial Services by HDFC Securities

The stock price has already broken out on the daily chart on 6th January. Moreover, insurance as a sector is showing strength on the chart

Topics
Derivatives strategy | Max Financial Services | HDFC Securities

Nandish Shah  |  Mumbai 

Oscillators like RSI and MFI suggest strength in the stock
Oscillators like RSI and MFI suggest strength in the stock

Bull spread Strategy on Max Financial Services

Buy MFSL Jan 740 Call at Rs 30 & simultaneously sell Jan 780 Call at Rs 14

Lot Size 1300

Cost of the strategy Rs 16 (Rs 20800 per strategy)

Maximum profit Rs 31200 If MFSL closes at or above 780 till 28 Jan expiry.

Breakeven Point Rs 756

Rationale:

  • Long build up was seen in the MFSL Futures’ where we have seen 11% rise (Prov) in the Open Interest with price rising by 3%
  • The stock price has already broken out on the daily chart on 6th January
  • Oscillators like RSI and MFI suggest strength in the stock
  • Plus, DI is trading above minus DI while ADX is placed above 25, Indicating momentum in the current uptrend.
  • Insurance as a sector is showing strength on the chart

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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: Fri, January 08 2021. 07:12 IST
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