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Nandish Shah recommends a Bull Spread strategy on Larsen & Toubro Infotech

The derivative analyst from HDFC Securities recommends this strategy based on the following four rationales

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Bull Spread Strategy on LTI

Buy Larsen & Toubro Infotech Nov 7,000 CALL at Rs 250 & simultaneously sell 7,200 CALL at Rs 166
Lot Size 150

Cost of the strategy Rs 84 (Rs 12,600 per strategy)

Maximum profit Rs 17,400 If LTI closes at or above 7,200 on 25 Nov expiry

Breakeven Point Rs 7,084

Rationales:

- We have seen long build up in the LTI Futures, where we have seen 6%(Prov) rise in the Open Interest with price rising by 2.4%.

- Stock price has broken out from the downward sloping trendline on the daily chart.

- RSI and MFI Oscillators are placed above 60 and sloping upwards, Indicating strength in the current uptrend.

- Plus DI is trading above Minus DI while ADX line is placed above 25, Indicating momentum in the current uptrend.

Disclaimer: Nandish Shah is Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.