Option Strategy on Coal India by Motilal Oswal Securities

Strategy:

COAL INDIA – BULL CALL SPREAD

BUY 260 CE 1 LOT @ 3.70

SELL 270 CE 1 LOT @ 0.70

MAX RISK : 3 POINTS (Rs. 5,100)

REWARD : 7 POINTS (Rs. 11,900)

Rationale:
 

1. It has given a decisive consolidation breakout above 260

2. Trading above its monthly VWAP and short covering could lead it to higher zones

3. Put writing at 260 strike could provide the support

4. Call unwinding in 260 and 270 strike suggests an upside scope

5. Thus low risk strategy Bull Call Spread is recommended

Disclaimer: The analyst may have positions in any or all the stocks mentioned above.