A bull-call spread on M&M

The long-term outlook for the stock of Mahindra & Mahindra (₹922.25) is positive. As long as it remains above ₹710, the positive outlook will not face any threat.

The stock finds an immediate support at ₹825. If the current trend sustains, M&M could reach ₹1,160.

F&O pointers: The counter of M&M added over 5 lakh shares in open interest. The M&M July futures trades at a discount with respect to the spot price of ₹924.95, due to dividend payments of ₹7.50 a share. The stock will turn ex-dividend on July 12. Option trading indicates positive bias, as in-the-money calls have witnessed unwinding of open positions.

Strategy: Traders can consider a bull-call spread on M&M. This can be initiated by selling ₹960-call (₹8.95) and simultaneously buying the ₹920-call (₹22.75). That means, traders need to shell out ₹13,800 for the strategy, as the market lot is 1,000 shares.


The maximum loss could be the initial payment and that will happen if M&M fails to sustain the current level and closes at or below ₹920. A profit of ₹26,200 is possible if the stock rises to ₹960 or above during this series. Traders can consider exiting the position at a profit of ₹15,000 or at a loss of ₹7,500. Hold the position, for at least two weeks.

Long-term investors can consider buying M&M futures with a stop-loss at ₹902 initially for a target of ₹1,160 with trailing stop loss.

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