F&O picks: Analyst recommends 'Bull Spread' for Apollo Hospitals stock

F&O stocks: For Apollo Hospitals, the short-term trend is positive as it is placed above its 5, 11 and 20-day EMA.

Derivative Strategy

BULL SPREAD Strategy on Apollo Hospitals

Buy Apollo Hospitals (28-August Expiry) 7,600 Call at ₹175 and simultaneously sell 7,800 Call at ₹104

Lot Size: ₹125

Cost of the strategy: ₹71 (₹8875 per strategy)

Maximum profit: ₹16,125 if Apollo Hospital closes at or above 7800 on 28 August expiry.

Breakeven Point ₹7,671

Risk Reward Ratio: 1:1.82

Approx margin required: ₹33,000  ALSO READ | Monthly stock picks by Motilal Oswal Financial Services: HDFC Bk, LT Foods

Rationale:

➢ We have seen a long rollover in the Apollo Hospitals stock. This is indicated by an increase in open interest (OI) of 17 per cent, with a 0.60 per cent rise in the price.

 

➢ Short-term trend is positive as it is placed above its 5, 11 and 20 day EMA.

➢ Stock price has broken out on the daily chart with higher volumes.

➢ Momentum indicators and oscillators are showing strength in current uptrend.

 

(Disclaimer: This article is by Nandish Shah, senior technical/derivative analyst at HDFC Securities. Views expressed are his own.)