BULL SPREAD Strategy on ONGC
Buy ONGC (28-Sept Expiry) 190 CALL at Rs 2.40 & simultaneously sell 195 CALL at Rs 1.30
Lot Size: 3,850
Cost of the strategy: Rs 1.10 (Rs 4,235 per strategy)
Maximum profit: Rs 15015; If ONGC closes at or above Rs 195 on 28 Sept expiry.
Breakeven Point: Rs 191.5
Risk Reward Ratio: 1:3.55
Approx margin required: Rs 25,300
Long build up is seen in the ONGC Futures on Thursday where Open Interest surged by 17 per cent (Prov) with price rising by 2.2 per cent.
Stock price has broken out on the daily and weekly chart to close at five year high.
Stock price has been forming bullish higher top higher bottom candlestick pattern on the weekly and monthly chart.
- Oscillators like RSI(11) and MFI(10) are slopping upwards and placed above 60 on the daily and weekly chart, Indicting 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.