F&O Radar | Deploy Bull Call Ladder Spread in Nifty for potential gains from bullish stock placement

Lupin shares are currently trading at Rs 1,979.70 and have been consolidating over the past few months, signaling a healthy base-building phase. On the daily timeframe, the stock is showing early signs of a reversal and is on the verge of breaking out from a falling trend line that has acted as a key resistance zone.

“A sustainable move above the Rs 2,000 mark will not only confirm the breakout of the falling trend line but also validate the consolidation breakout, paving the way for a potential fresh uptrend,” said Hardik Matalia, Derivatives Analyst at Choice Broking.

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He believes that if this breakout sustains, the stock could move higher toward the immediate target range of Rs 2,100–Rs 2,150, with the possibility of extended upside if positive momentum continues.

From a momentum perspective, the Relative Strength Index (RSI) is currently at 58.07 and trending higher, indicating improving momentum and further room for an upward move.

“In terms of trend alignment, Lupin shares have successfully crossed above all key moving averages. Sustaining above these levels would reinforce bullish sentiment and indicate strong underlying support from trend indicators,” Matalia added.On the derivatives front, options data further supports this bullish setup. The highest Call open interest (OI) is concentrated at the Rs 2,000 strike, acting as an immediate hurdle.He stated, “A breakout and sustained move above this level could trigger short covering, adding further fuel to the rally. On the Put side, the highest OI is observed at the Rs 1,900 strike, marking this zone as a strong support base for the stock.”

Overall, if Lupin manages to sustain above the Rs 2,000 mark, it could unlock a fresh leg of upside momentum, positioning the stock to test higher levels in the near term. With this, Hardik Matalia suggests that traders deploy a Bull Call Ladder Spread in Lupin to benefit from this bullish setup.

Bull Call Ladder Spread

A bull call ladder spread is an options trading strategy that extends the bull call spread by adding an additional short call at a higher strike price. It involves 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 benefit from limited risk while capitalizing on a potential price surge. The downside risk is limited, while the upside profit is capped beyond a certain level; excessive upward movement can lead to losses due to the extra short call.

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(Prices as of September 10)

Below is the payoff graph of the strategy:

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(Source: Choice Broking)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)