F&O Strategy for Bharat Forge: HDFC Securities recommends a Bull Spread

Buy Bharat Forge Rs 800 Call option and simultaneously Sell Rs 820 Call of the June series, suggests Nandish Shah, Sr. derivatives & technical research analyst of HDFC Securities.

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

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.