Here's a derivative strategy from HDFC Securities for BPCL

Views on derivative call by Nandish Shah, Senior Technical & Derivative Analyst, HDFC securities.

Bear Spread strategy on BPCL

Buy BPCL August 310 Put at Rs 5.70 & simultaneously sell 300 Put at Rs 2.70

Lot Size 1,800

Cost of the strategy Rs 3 (Rs 5400 per strategy)

Maximum profit Rs 12,600 If BPCL closes at or below 300 on August expiry

Break even Point Rs 307

        

Rationale:

-- Short build-up seen in the BPCL Futures’ yesterday, where we have seen 2 per cent rise in Open Interest with price falling by 5 per cent.

-- Stock price has broken down on the daily chart by closing below the important support level of 322 with higher volumes

-- Stock price has been forming lower top lower bottom on the daily charts

-- Oscillators and Momentum Indicators like RSI and MACD showing weakness in the stock on the daily and weekly charts

-- Stock price is trading below its 5, 20 and 200 day SMA, Indicating weakness in the stock