Bull Spread strategy on Dr Reddy’s Labs by Nandish Shah of HDFC Securities




Bull spread Strategy on Dr Reddy’s Labs


Buy DR REDDY’S MARCH 4,600 Call at Rs 182 & simultaneously sell 4,800 Call at Rs 106



Lot Size: 125


Cost of the strategy: Rs 76 (Rs 9,500 per strategy)


Maximum profit: Rs 15,500 If Dr Reddy’s closes at or above 4,800 on March 25 expiry.


Breakeven point: Rs 4,676


Rationale:


— Long build-up was seen in the Dr Reddy Futures’ where we have seen 4 per cent (Prov) rise in the Open Interest with price rising by 1 per cent.


— The stock price has broken out on the daily chart where it closed above 200-day EMA with higher volumes.


— The stock price has formed double bottom around 4,380-odd levels


— Oscillators like RSI and MFI are showing strength in the stock



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

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor





Source link