Godrej Properties: Bull Spread Strategy apt for July expiry; here's why

The stock of Godrej Properties saw 1 per cent addition in Open Interest (Prov) on Thursday, July 13, with price rising by 1.40 per cent

BULL SPREAD Strategy on GODREJ PROPERTIES

Buy GODREJ PROPERTY (27-July Expiry) 1,620 CALL at Rs 48 & simultaneously sell 1,700 CALL at Rs 18
 

Lot Size: 475
 

Cost of the strategy: Rs 30 (Rs 14,250 per strategy)
 

Maximum profit: Rs 23,750 If Godrej Property closes at or above Rs 1,700 on July 27 expiry.

Breakeven Point: Rs 1,650
 

Approx margin required: Rs 27,000

Rationale:

>> We saw a long build up in Godrej Property on Thursday, where we have seen 1 per cent addition in Open Interest (Prov) with price rising by 1.40 per cent.
 

 

>> The primary and intermediate trend of the stock is positive as the stock price is trading above its all-important moving averages

>> The stock price has broken out on the weekly chart to close at the highest level since April 2022.
 

>> Oscillators like RSI(11) and MFI (10) are in the rising mode and placed above 60 on the weekly charts, suggesting strength in the current uptrend.

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

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Disclaimer: Nandish Shah is senior derivatives & technical research analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.