Bull Spread Strategy on Bajaj Finance by HDFC Securities

Buy Bajaj Finance (24-Feb Expiry) 1020 Call at Rs 12 & Simultaneously Sell 1040 Call at Rs 6.5

• Lot Size 750
• Cost of the strategy Rs 5.5 (Rs 4125 per strategy)
• Maximum profit Rs 10875 If BAJAJ FINANCE closes at or above 1040 on 24 Feb expiry.
• Breakeven Point Rs 1025.5
• Risk Reward Ratio 1: 2.64
• Approx margin required Rs 26000

Rationale

• Long build up is seen in the BAJAJ FINANCE Futures where we have seen sharp rise in OI with price rising by 3.6%.
• Stock price has broken out on the daily chart with higher volumes.
• Primary trend of the stock is positive as it is placed above its important moving averages.
• Momentum Indicators and Oscillators are showing strength in current uptrend.

Note: It is advisable to book profit in the strategy when ROI exceeds 20%.