Nandish Shah of HDFC Sec recommends Bull Spread strategy on Tata Steel

The positional trend for the metal Index has been bullish

Bull spread Strategy on TATA STEEL

Buy TATA STEEL MARCH 1,340 CALL at Rs 43 & simultaneously sell 1,400 CALL at Rs 23

Lot Size: 425

Cost of the strategy Rs 20 (Rs 8,500 per strategy)

Maximum profit: Rs 17,000 If Tata steel closes at or above 1400 on 31 March expiry.

Breakeven Point: Rs 1,360

Rationale:

We have seen long build up in the Tata steel future segment where we have seen 12 per cent addition (Prov) in Open Interest with price rising by 4.25 per cent.

The stock price has broken out from the bullish "flag" pattern.
 

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