CONCOR Strategy Analyzed – A Simple Look

Nandish Shah, an analyst at HDFC Securities, suggests a specific trade for CONCOR stock, focusing on the December 30th expiry options. This strategy aims to profit if CONCOR’s price goes up, while limiting potential losses. It’s a calculated bet based on current market trends and technical signals.

Key Points

• Buy CONCOR 520 Call option for ₹8.2 per contract.
• Simultaneously sell a 530 Call option for ₹4.9.
• Trade size: 1,250 contracts, costing ₹3.3 per strategy.
• Maximum profit potential: ₹8,375 if CONCOR hits ₹530.
• Breakeven point is ₹524 – covering initial investment costs.
• Risk-reward ratio is 1:2.03, a favorable profit chance.

Understanding the Trade

The strategy involves buying a ‘call’ option that gives you the right to buy CONCOR shares at ₹520. At the same time, you’re selling a ‘call’ option that someone else can buy CONCOR shares at ₹530. This is done to capture profit if CONCOR’s price increases significantly.

Risk and Reward

If CONCOR’s price rises to or above ₹530 on December 30th, you’ll make the most profit, up to ₹8,375. The strategy is designed with a 1:2.03 risk-reward ratio, meaning for every ₹1 you risk, you could potentially gain ₹2. The breakeven point is set at ₹524, meaning you would need to cover your initial costs, regardless of the final outcome.

Important Details

The initial cost of this strategy is ₹3.3 per trade, and you’ll need approximately ₹5,6000 in margin. The analyst believes there’s current momentum supporting a rise in CONCOR’s price, indicated by a positive short-term trend and strength in momentum indicators.

Ultimately, this strategy represents a calculated approach to capitalizing on anticipated upward movement in CONCOR’s stock price.