Looking for short-term F&O trade? Check this 'Bull Spread' on Eicher Motors

BULL SPREAD Strategy on EICHER MOTORS

 

Buy EICHER MOTORS (June 26 expiry) 5,500 CALL at ₹58 & simultaneously sell 5,600 CALL at ₹25₹

 

Lot Size: 175

 

Cost of strategy: ₹33 (₹5,775 per strategy)

 

Maximum profit: ₹11,725 if EICHER MOTORS share price closes at or above ₹5,600 on June 26

expiry

 

Breakeven Point: ₹5,533

 

Risk Reward Ratio: 1: 2.03

 

Approx margin required: ₹34,000

 

Rationale:

 

>> Long build up was seen in Eicher Motors Futures on Thursday, where the open interest rose by 2 per cent while the share price gained 1.86 per cent.

 

 

>> The short-term trend of Eicher Motors stock is strong as the stock price is placed above its 5,11, and 20 day EMA.

 

>> Eicher Motor share price has broken out from the downward sloping trendline on the daily chart with higher volumes.

 

>> RSI oscillator is in rising mode and placed above 60 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.  ALSO READ: F&O: Here's a 'Bear Spread' for Nifty MidCap as it drops below 5, 20-DEMA

 

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Disclaimer:  Nandish Shah is a senior technical/derivative analyst at HDFC Securities. Views expressed are his own.