Bear Spread strategy on TATA STEEL
Buy TATA STEEL August 430: Put at Rs 14 & simultaneously sell 410 Put at Rs 8.
Lot Size: 1061.
Cost of the strategy: Rs 6 (Rs 6366 per strategy)
Maximum profit: Rs 14854 if Tata Steel closes at or below Rs 410 on August expiry.
Break-even point: Rs 424
Rationale:
-- Short build up is seen in the Tata steel Futures’ yesterday, where we have seen sharp rise in Open Interest with price falling by 1.27%.
-- Stock price has broken down from the bearish cup and handle pattern on the daily chart where it closes at two year low.
-- Stock price has been forming lower top lower bottom on the daily charts.
-- Stock price is trading below its 5, 20 and 200 day SMA Indicating weakness in the stock.
-- Oscillators and Momentum Indicators like RSI and MACD showing weakness in the stock on the daily and weekly charts.