Derivative Strategy
BEAR SPREAD Strategy on AB CAPITAL
Buy Aditya Birla Capital (29-JUNE Expiry) 170 PUT at Rs 2.45 & simultaneously sell 165 PUT at Rs 0.95
Lot Size 5,400
Cost of the strategy Rs 1.5 (Rs 8,100 per strategy)
Maximum profit Rs 18,900; If AB CAPITAL closes at or below Rs 165 on 29-June expiry.
Breakeven Point Rs 168.5
Approx margin required Rs 32,400
Rationale:
We have seen short build up in Aditya Birla Capital Futures, where we have seen 21 per cent rise in Open Interest (Prov) with Aditya Birla Capital falling by 5 per cent.
Stock price has given bearish breakout on the daily chart where it closes at lowest level since 06-June.
Short term trend of the AB Capital turned weak as it has closed below its 5- and 11-day EMA.
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RSI Oscillator(11) has formed negative divergence on the daily chart.
Note: It is advisable to book profit in the strategy when ROI exceeds 20 per cent.
Disclaimer: Nandish Shah is Sr. Derivatives & Technical Research Analyst at HDFC Securities. He doesn’t hold any position in the stock. Views are personal.
First Published: Jun 23 2023 | 7:15 AM IST