F&O Strategy: Adopt Bull Spread Strategy for PFC, suggests HDFC Securities

Nandish Shah, Sr. derivatives & technical research analyst of HDFC Securities, recommends to buy 170 call option of PFC & simultaneously sell 180 call option of June series

Derivative Strategy
 

BULL SPREAD Strategy on PFC

Buy PFC (29-June Expiry) 170 CALL at Rs 6.2 & simultaneously sell 180 CALL at Rs 4.15

Lot Size: 6,200

Cost of the strategy: Rs 2.05 (Rs 12,710 per strategy)

Maximum profit: Rs 18,290 If PFC closes at or above 175 on 29 June expiry.

Breakeven Point: Rs 172.05

Approx margin required: Rs 37,000

Rationale:

>> Long rollover seen to the June series in PFC Future, with 9 per cent addition in Open Interest (Prov) with price rising by 2.5 per cent

>> The stock price has broken out on the daily chart with higher volumes where it closes at highest level since 15 May 2023

 

>> The stock price has been forming bullish higher top higher bottom candle stick pattern on the daily chart

>> Oscillators and momentum indicated showing strength in the current uptrend

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

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