F&O Radar | Implement Bull Call Ladder in Tata Consumer shares to win from Bullish Outlook

Tata Consumer Products (Tataconsum) Shares are currently being traded near RS 1,140.10 and are consolidated in the short term after witnessing a strong bounce of lower levels.

This phase of consolidation helped the stock absorbing recent profits and at the same time determine the stage for its next potential movement.

The stock has formed a Cup & Handhandspatron, a bullish continuation structure that usually indicates the possibility of an upward outbreak when the persistent purchasing pressure arises.

“Adding strength to this setup, a remarkable rise in trade volumes has recently been observed, which further confirms the continuous accumulation and increased market participation,” said Hardik Matalia, derived analyst at Choice Broking.

He noted that a sustainable movement above the RS 1,150 figure would confirm the outbreak of the Cup & Hand pattern that could unlock upward potential. If this breakout persists, the stock is well positioned to move higher and to test its recent Swing heights in the range of RS 1,230-RS 1,250, with a further upside down if the momentum extends.

From a momentum perspective, the relative strength index (RSI) is placed on the daily period of time at 65.39 with a positive upward curve, which points to strengthening the momentum and sufficient room for continuing the upward. In terms of trend coordination, the shares are comfortably traded above all its most important moving averages, which now acts as strong support zones and to strengthen the presence of a leaky undertone. Maintaining above these averages would further confirm the prevailing strength in the stock. Option data also supports this bullish structure on the front of the derivatives. The maximum open interest (OI) call for the following month is the RS 1,150 strike, which currently serves as an immediate obstacle. A decisive outbreak and continuing movement above this level can cause a short coverage, which accelerates the upward trend. On the other hand, the highest well OI is placed at the RS 1,100 attack, which determines this zone as a crucial support basis.

“In general, if Tataconsum manages to keep 1,150 marker above the RS, this can confirm a new outbreak and open the gates for a strong upward rally to the RS 1,230 -rs 1,250 zone in the short term,” Matalia added.

With this, Hardik Matalia proposes to use a Bull Call -Ladder in Tata Consumer shares to win from the Bullish prospects.

Bull Call Ladder

A Bull Call Ladder Spread is an options trade strategy that expands the spread of the bull call by adding an extra short call at a higher exercise price. It is about buying one ATM/ITM call, selling one OTM call and selling another higher OTM call. This strategy is used when the trader is moderately bullish, but wants to take advantage of a limited risk, while a potential price increase can also benefit. The downward risk is limited, while the upward profit over a certain level is closed, and excessive upward movement can lead to losses as a result of the extra short call.

(Prices from September 24)

Below is the payment graph of the strategy:

(Source: Choice Broking)

(Disclaimer: recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)