Nandish Shah recommends a Bull spread strategy on Chambal Fertilisers

The derivative analyst from HDFC Securities recommends buying CHAMBAL FERT March 400 CALL at Rs 13.50 & simultaneously selling 420 CALL at Rs 7.50.

Bull spread strategy on CHAMBAL FERT

Buy CHAMBAL FERT March 400 CALL at Rs 13.50 & simultaneously sell 420 CALL at Rs 7.50

Lot Size: 1,500

Cost of the strategy: Rs 6 (Rs 9,000 per strategy)

Maximum Profit: Rs 21,000 If Chambal Fert closes at or above 420 on 31 March expiry.

Breakeven Point: Rs 406

Rationale:

• We have seen long build up in the future segment where we have seen 2% addition (Prov) in Open Interest with price rising by 0.7%.
   
• Primary trend is bullish as stock price is trading above its 200 day EMA.
   
• Short term trend of the stock turned bullish as stock