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HDFC Securities recommends a BULL SPREAD strategy on Larsen & Toubro

Nandish Shah, Sr. derivatives & technical research analyst, recommends to Buy LARSEN 2300 Call option and simultaneously Sell 2400 Call of the May series.

Larsen & Toubro
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Nandish Shah Mumbai

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Derivative Strategy

BULL SPREAD Strategy on Larsen & Toubro

Buy LARSEN (25-MAY Expiry) 2300 CALL at Rs 57 & simultaneously sell 2400 CALL at Rs 19

Lot Size 300

Cost of the strategy Rs 38 (Rs 11,400 per strategy)

Maximum profit Rs 18,600; If LARSEN closes at or above Rs 2400 on 25-May expiry.

Breakeven Point Rs 2,338

Approx margin required Rs 24,200

Rationale:
  • We have seen long build up in LARSEN Future, where we have seen 27 per cent addition in  Open Interest (Prov) with price rising by 1.1 per cent.
     
  • Primary and intermediate trend of the stock is positive as stock price is trading above important moving averages.
     
  • Stock price has been forming bullish higher top higher bottom formation on the daily chart.
     
  • Oscillators and momentum Indicators are 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.

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First Published: Apr 28 2023 | 7:28 AM IST

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