DLF: Chart view and trading strategy for the month of May

DLF

Observations

- the stock is currently trading in downward yellow channel
- 20 day EMA at 255
- 50 day EMA around 267
-38.2 Fibonacci retracement of the fall from 332 to 232 comes at 270


Given the important levels

One may consider a Bear call Spread strategy in DLF
It involves selling Call option and buying higher OTM Call option

Sell DLF 27 May expiry

270 Call Option
CMP 5.2

Simultaneously
Buy 290 Call option
CMP 1.8

The spread strategy reduces margin requirement and thereby can give higher ROI ( approximately 13.5% yield potential on margin requirement )

Max profit potential in strategy Rs 11220/- per strategy lot

Take care & safe trading...!!!

Disclaimer:

- The view expressed here is my personal view
- Past performance is not a guarantee for future predictions
- Use this for educational purpose
- Any decision you take, you need to take responsibility for the same
- It's your hard earned money. Treat it wisely
- Trade / Invest keeping in mind your trading style, goals and objectives, time horizon & risk tolerance
- if trading in F&O, understand that F&O trading involves risk
- Do take proper risk management measures
- Do your own analysis and consult your financial adviser if need be

Trade active:

Strategy update

DLF CMP 260.5

DLF 270 Call Option CMP 9.7
Loss of 4.5 points

DLF 290 Call option CMP 4.1
(Profit of 2.3 points)

We Book profits in 290 Call option and continue to hold 270 Call Short

Comment:

The adjustment gives us protection for a rise in DLF stock price up to 277.5 on expiry day

Comment:

DLF back to 250 odd levels

Our strategy update

DLF 270 Call Option CMP 4.15

Profit in strategy

3300*(7.5 - 4.15) = Rs 11055/- per lot

Happy trading...!!!