F&O Strategy: Nandish Shah recommends a Bull Spread on Tata Consumer

BULL SPREAD Strategy on TATA CONSUMER

Buy TATA CONSUMER (29-Sept Expiry) 850 CALL at Rs 27 & simultaneously sell 870 CALL at Rs 19

Lot Size: 900
 

Cost of the strategy: Rs 8 (Rs 7,200 per strategy)
 

Maximum profit: Rs 10,800 If Tata consumer closes at or above Rs 870 on Sept 29 expiry
 

Breakeven Point: Rs 858
 

Approx margin required: Rs 34,000
 

Rationale:

• We have seen long build up in the Tata comm futures, where we have seen 12 per cent addition (Prov) in Open Interest with price rising by 4 per cent.
   
• The stock price has broken out on the daily chart with higher volumes, where it closed at the highest level since November 2021.
   
• Momentum Oscillators like RSI (11) and MFI (10) are in rising mode and are placed above 60 on the daily weekly chart, indicating strength in the current uptrend.
   
• Plus DI is trading above minus DI and ADX line has started rising upwards, indicating that the stock price is likely to gather momentum in the current uptrend.

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