Currently, the stock is trading around 315 levels, which has also been a resistance in the past for the stock.
Talking about the technical location of the stock, it is located above all its significant short, medium and long term exponential moving averages on the chart.
On Friday’s session, the DEMA 20 also crossed the DEMA 50 from below, forming the golden cross.
Moreover, the chart of M&M Finance is forming an ascending triangle pattern on the daily time frame, a formation that is usually considered a continuation pattern that signals a possible upward move. “M&MFIN is on the verge of breaking out of this pattern, supported by increased trading volume, and has recently rebounded from its long-term EMA (200-day). The stock has also broken out above its key moving averages, including the short-term 20-day EMA and the medium-term 50-day EMA, which indicate increasing strength in its current trend,” said Hardik Matalia, Derivatives Analyst at Choice Broking. The Relative Strength Index (RSI) is at 60.58 and is trending higher, suggesting a build-up in buying momentum. “If M&MFIN sustains its position above the 320 level, the stock could move towards higher price targets of 330 and 345,” Matalia added.
Options data further suggests that the highest concentration of open interest in put options (PUT) is found at the 310 and 300 strike prices, indicating that these levels could serve as immediate support. Conversely, the highest open interest in call options (CALL) is found at the 320 and 330 strike prices, suggesting potential resistance.
Hardik Matalia believes that a decisive break above this resistance zone could trigger short covering, which could propel the stock towards an upward trajectory. In such a situation, it is suggested to implement a Bull Call Spread to take advantage of the potential upward move.
Bullish Option Buy Spread
A bullish call spread is an options trading strategy that involves two call options. It is typically used when a trader expects a moderate increase in the price of the underlying asset.
The strategy involves buying a call option at a lower strike price and selling another call option at a higher strike price, with both options having the same expiration date. The goal is to profit from an increase in the price of the underlying asset, while limiting both potential gains and potential losses.
(Prices as of August 26)
Below is the strategy results chart:
ETMarkets.com(Source: Choice Broking)
(Disclaimer:The recommendations, suggestions, views and opinions of the experts are their own and do not represent the views of the Economic Times)
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