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Bull Spread strategy for Lupin Jan expiry amid long build-up in futures

Oscillators like RSI and MFI are in rising mode and placed above 60 on the weekly chart, indicating strength in Lupin's share, said Nandish Shah

Lupin Pharma
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Lupin Pharma

Nandish Shah Mumbai

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Bull Spread Strategy on Lupin

Buy Lupin Jan 25 expiry 1450 Call at Rs 17.2 and simultaneously sell 1500 Call at Rs 6.75

Lot size: 850

Cost of the strategy: Rs 10.45 (Rs 8,882 per strategy)

Maximum profit: Rs 33,618 if Lupin closes at or above Rs 1,500 on 25 Jan expiry.

Breakeven point: Rs 1,461

Risk Reward Ratio: 1:3.78

Approx margin required: Rs 42,500

Rationale:

>> Long build up is seen in Lupin Futures Thursday where Open Interest rose 4.5 per cent (Prov) with stock rising 1.85 per cent.

>> Stock price has broken out on the daily chart where it closed at all time high levels.
 

>> Stock price has been forming bullish higher top higher bottom formation on the daily chart.

>> Oscillators like RSI and MFI are in rising mode and placed above 60 on the weekly chart, indicating strength in the stock.

>> Pharma as a sector looking strong on the short and medium term charts.

Note: It is advisable to book profit in the strategy when ROI exceeds 20 per cent.

Disclaimer: Nandish Shah is Research Analyst (Technical and Derivative), HDFC Securities. He does not hold any positions in the above mentioned stock. Views are his own. 

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First Published: Jan 19 2024 | 6:59 AM IST

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