F&O Radar | Deploy Bull Call Ladder in Tata Consumer shares to gain from bullish outlook

Tata Consumer Products (TATACONSUM) shares are currently trading near Rs 1,140.10 and have been consolidating in the near term after witnessing a strong bounce from lower levels.

This phase of consolidation has helped the stock absorb recent gains while setting the stage for its next potential move.

The stock has formed a Cup & Handle pattern, a bullish continuation structure that typically signals the possibility of an upward breakout if sustained buying pressure emerges.

“Adding strength to this setup, a notable rise in trading volumes has been observed recently, further validating the ongoing accumulation and heightened market participation,” said Hardik Matalia, Derivative Analyst at Choice Broking.

He noted that a sustainable move above the Rs 1,150 mark would confirm the breakout of the Cup & Handle pattern, which could unlock further upside potential. If this breakout sustains, the stock is well-positioned to move higher and test its recent swing highs in the range of Rs 1,230–Rs 1,250, with further upside possible if momentum extends.

From a momentum perspective, the Relative Strength Index (RSI) on the daily time frame is placed at 65.39 with a positive upward curve, indicating strengthening momentum and ample room for continuation on the upside.

In terms of trend alignment, the stock is comfortably trading above all its key moving averages, which now act as strong support zones and reinforce the presence of a bullish undertone. Sustaining above these averages would further confirm the prevailing strength in the stock.

On the derivatives front, options data also supports this bullish structure. The maximum Call open interest (OI) for the next month expiry is at the Rs 1,150 strike, which currently serves as the immediate hurdle. A decisive breakout and sustained move above this level could trigger short covering, thereby accelerating the uptrend. On the downside, the highest Put OI is placed at the Rs 1,100 strike, establishing this zone as a crucial support base.

“Overall, if TATACONSUM manages to sustain above the Rs 1,150 mark, it could confirm a fresh breakout and open the gates for a strong upward rally towards the Rs 1,230–Rs 1,250 zone in the near term,” Matalia added.

With this, Hardik Matalia suggests deploying a Bull Call Ladder in Tata Consumer shares to gain from the bullish outlook.

Bull Call Ladder

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 also capitalizing on a potential price surge. The downside risk is limited, while the upside profit is capped beyond a certain level, and excessive upward movement can lead to losses due to the extra short call.

(Prices as of September 24)

Below is the payoff graph of the strategy:

(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)