Derivative Strategy

BULL SPREAD Strategy on Tata Motors

1) Buy Tata Motors (25-July Expiry) 1020 CALL at Rs 22 and simultaneously sell Rs 1,060 

CALL at Rs 10.6

Lot Size 550

Cost of the strategy: Rs 11.4 (Rs 6,270 per strategy)

Maximum profit: Rs 15,730 If Tata Motors closes at or above Rs 1,060 on 25 July

expiry.

Break Even Point: Rs 1,031.4

Risk Reward Ratio: 1:2.51

Approx margin required: Rs 19000

Rationale:

Long build up is seen in the Tata Motors Futures where we have seen 2 per cent (Prov) rise in Open interest with price rising by 2.31 per cent. Price rise is accompanied by the rise in the volume, suggesting strength in the up