Bull Spread Strategy on Bata India
Buy BATA (27-oct Expiry) 1840 CALL at Rs 41.70 & simultaneously sell 1900 CALL at Rs 21.05
Lot Size 275
Cost of the strategy Rs 20.65 (Rs 5,679 per strategy)
Maximum profit Rs 10,821; if Bata closes at or above Rs 1,900 on 27-Oct expiry.
Breakeven Point Rs 1,860.65
Approx margin required Rs 23,000
Rationale:
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We have seen long build up in the Bata futures on Wednesday, where we have seen 6 per cent addition (Prov) in Open Interest with price rising by 1.28 per cent.
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The stock price has formed double bottom around Rs 1,755 level.
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The short term trend of the stock turned positive as stock price is trading above its 5- and 11-day EMA.
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The momentum Oscillators like RSI (11) and MFI (10) are in rising mode and placed above 60 on the daily chart, indicating strength in the current uptrend.
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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