Financial services

Nandish Shah Recommends Bull Spread Strategy for M&M Financial Services



BULL SPREAD strategy on M&M Finance

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

Batch size 4000

Strategy cost Rs 2.7 (Rs 10,800 per strategy)

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

Breakeven point Rs 192.7


Reasoning:

>> We have seen a long build in equity futures in the July series so far, where we have seen a 12% increase in open interest with an 8% rise in price.

>> The stock price broke out on the daily chart from the descending trend line, adjoining the highs of November 9, 2021 and May 4, 2022.

>> The stock price has formed a higher lower upper bullish candlestick pattern on the daily chart.

>> Oscillators like RSI and MFI are in ascending mode and placed above 60 indicating the strength of the current uptrend.

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Disclaimer: Nandish Shah is a Principal Derivatives and Technical Analyst at HDFC Securities. Views are personal.

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