Nandish Shah of HDFC Securities suggests Bull Spread strategy on IGL

The stock price of Indraprastha Gas (IGL) has been taking support at 200 day EMA since January 2023

BULL SPREAD Strategy on IGL
 

Buy IGL (23-Feb Expiry) 440 CALL at Rs 7 & simultaneously sell 450 CALL at Rs 4
 

Lot Size: 1,375
 

Cost of the strategy: Rs 3 (Rs 4,125 per strategy)
 

Maximum profit Rs 9,675 if IGL closes at or above Rs 450 on 23 February expiry
 

Breakeven Point: Rs 443

Approx margin required: Rs 21,000

Rationale:

>> We have seen long build up in the IGL Futures during the February series till now, where we have seen 10 per cent addition in Open Interest with price rising by 5 per cent.
 

>> The stock price has broken out on the daily chart on 08-Feb with higher volumes.

>> The stock price has been taking support at 200 day EMA since January 2023.

>> Momentum Oscillators like RSI (11) and MFI (10) are sloping upwards and placed above 60 on the daily chart, indicating strength in the current uptrend.

>>Plus DI is trading above minus DI, while ADX line has started sloping upward, indicating stock price is likely to gather momentum in the coming days.

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

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Disclaimer: Nandish Shah is senior derivatives & technical research analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.