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BULL SPREAD Strategy on BEL
Buy BEL (29-FEB Expiry) 195 CALL at Rs 4.75 & simultaneously sell 200 CALL at Rs 2.9
Lot Size 5700
Cost of the strategy Rs 1.85 (Rs 10,545 per strategy)
Maximum profit Rs 17,955; If BEL closes at or above Rs 200 on 29-Feb expiry.
Breakeven Point Rs 196.85
Risk Reward Ratio 1:1.70
Approx margin required Rs 39,000
Rationale:
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Long build up is seen in the BEL Futures where we have seen 10 per cent rise in OI with price rising by 4 per cent.
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The stock price has broken out on the daily chart with higher volumes, to close at all time high levels.
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The stock price has been forming bullish higher top higher bottom formation on the weekly charts.
- RSI Oscillator is in rising mode and placed above 60 on the daily chart, indicating strength in the stock
Note: It is advisable to book profit in the strategy when ROI exceeds 20%.
Disclaimer: Nandish Shah is Sr. Derivatives & Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.
