Bear spread strategy on Maruti Suzuki by Nandish Shah of HDFC Securities




Buy MARUTI APRIL 6,800 Put at Rs 244 & simultaneously sell 6,500 Put at Rs 124


Lot size: 100



Cost of the strategy: Rs 120 (Rs 12,000 per strategy)


Maximum profit: Rs 18,000 If Maruti closes at or below 6,500 on 29 April expiry.


Breakeven point: Rs 6,680


Rationale:


— Short build-up was seen in the Maruti Futures’ where we have seen 69 per cent (prov) rise in the Open Interest with price falling by 4 per cent.


— The stock price has broken down from the upward slopping trendline, adjoining the lows of September 24, 2020 and February 26, 2021 on the daily chart


— The stock price has broken down on the daily chart where it closed at lowest level since September 30, 2020 with higher volumes


— Minus DI is placed above Plus DI while ADX line has crossed 20 levels, Indicating that the stock’s momentum is in downtrend


— Oscillators like RSI and MFI showing weakness in the stock



Disclaimer: Nandish Shah is Technical Research Analyst at He doesn’t hold any position in the stock. Views are personal.

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