Bull Spread Strategy on Larsen & Toubro (L&T)
Buy Larsen (27-oct Expiry) 1920 CALL at Rs 42.45 & simultaneously sell 1960 CALL at Rs 26.45
Lot Size 300
Cost of the strategy Rs 16 (Rs 4,800 per strategy)
Maximum profit Rs 7,200; If L&T closes at or above Rs 1,960 on 29 Sept expiry.
Breakeven Point Rs 1936
Approx margin required Rs 25,000
We have seen long build up in the Larsen futures on Thursday, where we have seen 5 per cent addition (Prov) in Open Interest with price rising by 2 per cent.
During the recent correction, the stock price took support at 100-day EMA and reversed northwards.
The short-term trend of the stock turned positive as stock price is trading above its 5-, 20-day EMA.
The momentum oscillator RSI (11) is in rising mode and placed above 50 on the daily chart, indicating strength 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.