F&O Call: Nandish Shah recommends Bear Spread strategy in HAL

BEAR SPREAD strategy on HAL

Buy HAL (29-Dec Expiry) 2600 PUT at Rs 51 & simultaneously sell 2500 PUT at Rs 19

Lot Size 475

Cost of the strategy Rs 32 (Rs 15,200 per strategy)

Maximum profit Rs 32,300; If HAL closes at or below Rs 2,500 on 29-Dec expiry.

Breakeven Point Rs 2,568

Approx margin required Rs 43,300

Rationale:

• 
  We have seen short build up in the HAL Futures on Thursday, where we have seen 4 per cent addition (Prov) in Open Interest with price falling by 3.3 per cent.
  
• 
  The stock price has broken down on the daily chart, where it closes at one month low.
  
• 
  Further, the stock has broken below the upward sloping trendline, adjoining the lows of 13-May-2022 and 14-Nov-2022 on the daily chart.
  
• 
  Momentum Oscillators like RSI (11) and MFI (10) are placed below 40 on the daily chart, indicating strength in the current downtrend.

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.