Bajaj Finance Options strategy: HDFC Securities suggests Bull Call Spread | Markets News

BULL SPREAD Strategy on BAJAJ FINANCE

Buy BAJAJ FINANCE (24-Feb Expiry) 1020 CALL at ₹12 and simultaneously sell 1040 CALL at ₹6.5 

Lot Size: 750

 
Cost of the strategy: ₹5.5 (₹4,125 per strategy)

 
Maximum profit: ₹10,875 if BAJAJ FINANCE closes at or above ₹1,040 on 24 Feb expiry

 
Breakeven Point: ₹1,025.5

 
Risk Reward Ratio: 1: 2.64

 
Approx margin required: ₹26,000

Rationale: 

>> Long build-up is being seen in BAJAJ FINANCE Futures. There was a sharp rise in open interest (OI) on Thursday, along with a rise in stock price by 3.6 per cent.

>> Bajaj Finance share price has broken out on the daily chart with higher volumes.

>> Primary trend of Bajaj Finance stock is positive as it is placed above its important moving averages.

>> Momentum Indicators and Oscillators are showing strength in the current uptrend.

Note: It is advisable to book profit in the strategy when ROI exceeds 20 per cent.

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Disclaimer: This article is by Nandish Shah, senior technical/derivative analyst, HDFC Securities. View expressed are his own.