F&O Strategy: Nandish Shah recommends a Bull Spread on L&T

The technical analyst from HDFC Securities recommends buying L&T 1900 Call and simultaneously selling 1920 Call for the August series.

BULL SPREAD Strategy on L&T

Buy L&T (25-August Expiry) 1900 CALL at Rs 23 & simultaneously sell 1920 CALL at Rs 15

Lot Size 300

Cost of the strategy Rs 8 (Rs 2,400 per strategy)

Maximum profit Rs 3,600 if L&T closes at or above Rs 1,920 on 25 August expiry.

Breakeven Point Rs 1,908

Approx margin required Rs 22,000

Rationales:

• We have seen long build up in the L&T futures, where we have seen 9 per cent addition (Prov) in Open Interest with price rising by 2 per cent.
   
• The stock price has broken out on the daily chart with higher volumes where it has closed at highest level since 10 February 2022.
   
• Momentum Oscillators like the RSI(11) and MFI(10) are in rising mode and placed above 60 on the daily chart, indicating strength in the current uptrend.
   
• Plus DI is trading above minus DI while ADX line is placed above 25, indicating momentum in the current uptrend.

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