Bull spread Strategy on Sun Pharma
Buy Sun Pharma Feb 650 Call at Rs 20 & simultaneously sell Feb 680 Call at Rs 10
Lot Size: 1,400
Cost of the strategy: Rs 10 (Rs 14,000 per strategy)
Maximum profit: Rs 28,000 If Sun Pharma closes at or above 680 on 25 Feb expiry.
Breakeven Point: Rs 660
Rationale:
-- Long build-up was seen in Sun Pharma Futures’ where we have seen 7 per cent rise in the Open Interest with price rising by 2 per cent.
-- The stock price has broken out on the daily chart, where it closed at highest level since September 2018, with higher volumes
-- Oscillators like RSI and MFI are showing strength in the stock
-- Primary trend of the stock is positive where it is trading above its 100- and 200-day EMA.
-- The stock price has witnessed running correction of 10 per cent from the recent high
Disclaimer: Nandish Shah is Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.
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