HPCL share price: Nandish Shah of HDFC Sec suggests 'Bull Spread' strategy

F&O Trading, HPCL stock: The stock price has been forming bullish 'Higher Top-Higher Bottom' formation on the weekly chart

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BULL SPREAD Strategy on HPCL

Buy HPCL (26-Dec Expiry) 420 CALL at Rs 6 & simultaneously sell 430 CALL at Rs 3.5

  Lot Size: 2,025 

Cost of the strategy: Rs 2.5 (Rs 5,063 per strategy) 

Maximum profit: Rs 15,188 if HPCL closes at or above Rs 430 on 26 Dec expiry.

  Breakeven Point: Rs 422.5

  Risk Reward Ratio: 1: 3

  Approx margin required: Rs 29,000

 

Rationale:

>> Long build up is seen in HPCL Futures, where we have seen 7 per cent rise in the open interest with price rising by 0.39 per cent.

  >> The stock price has been forming bullish 'Higher Top-Higher Bottom' formation on the weekly charts.

 

>> Primary trend of HPCL share price is positive as the stock price is placed above its 200-day EMA.

 

>> Momentum Oscillators like RSI and MFI are in rising mode and placed above 60 on the daily chart, indicating strength in the current uptrend.

 

Note : It is advisable to book profit in the strategy when ROI exceeds 20 per cent.  ===================  Disclaimer: Nandish Shah is a senior technical/derivative analyst at HDFC Securities. Views expressed are his own. He may/may not have position in the stock.