 "Cipla")
BULL SPREAD Strategy on CIPLA
Buy CIPLA (27-FEB Expiry) 1500 CALL at Rs 20 & simultaneously sell 1560 CALL at Rs 6.5
Lot Size: 325
Cost of strategy: Rs 13.5 (Rs 4,388 per strategy)
Maximum profit: Rs 15112 if CIPLA closes at or above Rs 1,560 on 06 Feb expiry
Breakeven Point: Rs 1,413.5
Risk Reward Ratio: 1: 3.44
Approx margin required: Rs 17,000
Rationale:
>> Long build up is seen in CIPLA Futures, where we have seen 4 per cent rise in the open interest on the day when Cipla share price rose by 2 per cent on Thursday.
>> The short-term trend turned positive as Cipla stock price closed above its 5 and 11 day EMA.
>> Pharma stocks are looking strong on the short term charts.
>> Momentum Oscillators like RSI and MFI are in rising mode and placed above 50 on the daily chart, indicating strength in the current uptrend.
Note: It is advisable to book profit in the strategy when ROI exceeds 20 per cent.
=============== Disclaimer: Nandish Shah, Senior Technical/Derivative Analyst at HDFC Securities. Views expressed are his own.
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