Options Trading Strategies: Bharti Airtel Bull Ratio spread, Way2Wealth

Strategy Rationale: Bharti Airtel has provided a breakout from the inverted head and shoulders pattern which has a minimum target of 345 on the upside. On the weekly charts, a bounce back is expected as it has reversed from the lower Bollinger band. The momentum indicators too are in favour of bulls as the daily MACD has come above the zero reference line and the weekly MACD has too come into buy mode. On the lower side the neckline support is pegged at 315.

Strategy Details: The strategy consists of buying 1 lot of Bharti Airtel July 320 Call option at Rs.11.95 and selling 2 lots of Bharti Airtel July 340 Call option at Rs. 3.75. The premium outflow in this strategy would be Rs.4.45. Initial outflow is estimated to be Rs.4, 450 at the time of initiation of strategy.

Profit and Loss Matrix: Maximum Loss of Rs.4, 450 if Essar oil closes below 320 and Maximum Profit of 15,550 if it closes around 340 at the time of expiry. However, one needs to hedge this position by buying 1 lot in futures if it closes above 356.
 
Leveraging Cost: The SPAN margin of complete strategy would be around Rs.46, 400 at the time of initiation and may vary depending upon the volatility in the market.

Strategy:

• Buy 1 lot of Bharti Airtel July. 320 Call around 11.95
• Sell 2 lots of Bharti Airtel July. 340 Call around 3.75

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