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Bull spread Strategy on Amara Raja Batteries
Buy AMARAJA BATTERIES Jan 650 CALL at Rs 14 and simultaneously sell 670 CALL at Rs 7
Lot Size 1000
Cost of the strategy Rs 7 (Rs 7,000 per strategy)
Maximum profit Rs 13,000 if Amaraja batteries closes at or above 670 on January 27 expiry.
Breakeven Point Rs 657
Rationale:
- We have seen first sign of long build up in the Amaraja battery Futures during the January series till now, where we have seen 2 per cent rise in the Open Interest with price rising by 4 per cent.
- Stock price has broken out on the daily chart with higher volumes to close at highest level since December 10
- Short term trend is bullish as the stock price is closed above all important short-term moving averages.
- RSI Oscillators is placed at 60 and sloping upwards, indicating strength in the current uptrend.
Disclaimer: Nandish Shah is a Senior Derivative & Technical Analyst at HDFC Securities. He doesn't hold any position in the stocks.
