Nandish Shah recommends Bull Spread on Glenmark Pharma for March series
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Derivative Strategy
BULL SPREAD Strategy on Glenmark Pharma
Buy Glenmark Pharma (29-March Expiry) 440 CALL at Rs 7 & simultaneously sell 450 CALL at Rs 4
Lot Size: 1,450
Cost of the strategy: Rs 3 (Rs 4,350 per strategy)
Maximum profit: Rs 10,150 If Glenmark closes at or above 450 on 29 March expiry.
Breakeven Point: Rs 443
Approx margin required: Rs 22,000
Rationale:
>> Seen long build up in the Glenmark Future, around 2 per cent addition in Open Interest with price rising by 1.2 per cent
>> Short term trend of the stock turned bullish as stock price is trading above its 11 and 20 day EMA
>> During last few days, the stock price is forming support around 200 day EMA
>> RSI and MFI oscillator is placed above 50 and rising upwards on the daily and weekly chart, which indicates strength in the current uptrend
>> Pharma as a sector looking good on the short term charts
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.
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