 "F&O Strategy for Bharat Forge: HDFC Securities recommends a Bull Spread")
Bull Spread Strategy on Bharat Forge
Buy BHARATFORGE (29-June Expiry) 800 CALL at Rs 22.1 & simultaneously sell 820 CALL at Rs 18.6
Lot Size 1,000
Cost of the strategy Rs 3.50 (Rs 3,500 per strategy)
Maximum profit Rs 16,500; If BHARATFORGE closes at or above Rs 820 on 29-June expiry.
Breakeven Point Rs 803.5
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Approx margin required Rs 28,000
Rationale:
- We have seen long build up in Bharat Forge Future on Thursday, where we have seen 2 per cent addition in Open Interest (Prov) with price rising by 0.64 per cent.
- The stock price has broken from the downward sloping trendline on the daily chart, adjoining the highs of 13-Feb-2023 and 02-May 2023.
- Oscillators and momentum indicators are showing strength in the current uptrend.
- Plus DI is trading above minus DI while ADX line has started sloping upwards, suggesting stock price is likely to gather momentum in the coming days.
Note: It is advisable to book profit in the strategy when ROI exceeds 20 per cent.
Disclaimer: Nandish Shah is Sr. Derivatives & Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.