Here’s a Bull Spread strategy on Tata Power by Nandish Shah of HDFC Sec


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The stock price of Tata Power has witnessed running correction of 10 per cent from the recent high and has reached to a support level which, HDFC Securities believes, is a good buying opportunity

Topics

derivative strategy | Derivative trading | Markets



Nandish Shah  | 
Mumbai 




Bull spread Strategy on Tata Power


Buy Feb 80 Call at Rs 3.9 & simultaneously sell Feb 85 Call at Rs 2.50


Lot Size 13500


Cost of the strategy Rs 1.4 (Rs 18900 per strategy)


Maximum profit Rs 48600 If closes at or above 85 on 25 Feb expiry.


Breakeven Point Rs 81.4


Rationale:


  1. Long build up was seen in the Futures’ where we have seen 3 per cent rise in the Open Interest with price rising by 1 per cent.

  2. We have seen healthy rollover of 85 per cent to the February series with increase in rollover cost.

  3. The stock price has reached to a support of level of 50-day EMA.





  4. Primary trend of the stock is positive where it is trading above its 100 and 200 day EMA.

  5. The stock price has witnessed running correction of 10% from the recent high and has reached to a support level which we believe is a good buying opportunity.


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


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First Published: Fri, January 29 2021. 07:27 IST





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