Nandish Shah recommends Bull Spread strategy for M&M Financial Services

The stock price of M&M Financial Services has broken out on the daily chart from the downward sloping trendline

BULL SPREAD Strategy on M&M Finance
 

Buy M&M Finance (28-July Expiry) 190 CALL at Rs 5.2 and simultaneously sell 200 CALL at Rs 2.50

Lot Size 4000

Cost of the strategy Rs 2.7 (Rs 10,800 per strategy)
 

Maximum profit Rs 29,200 if M&M Finance closes at or above 200 on 28 July expiry
 

Breakeven Point Rs 192.7

Rationale:

>> We have seen a long build up in the stock's futures in the July series till now, where we have seen 12% addition in Open Interest with price rising by 8%.

>> The stock price has broken out on the daily chart from the downward sloping trendline, adjoining the highs of 09-Nov 2021 and 04-May 2022.

>> The stock price has been forming bullish higher bottom higher top candle stick pattern on the daily chart.

>> Oscillators like RSI and MFI are in rising mode and placed above 60, Indicating strength in the current uptrend.

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Disclaimer: Nandish Shah is Senior Derivative & Technical Analyst at HDFC Securities. Views are personal.