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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.

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Nandish Shah Mumbai

1 min read Last Updated : Jun 02 2023 | 7:56 AM IST

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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

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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.