Bull spread strategy on Bharat Forge by Nandish Shah of HDFC Securities

Buy BHARAT FORGE MAY 650 CALL at Rs 25 and simultaneously sell 680

CALL at Rs 15

Lot Size: 1,500

Cost of the strategy: Rs 10 (Rs 15,000 per strategy)

Maximum profit: Rs 30,000 If Bharat Forge closes at or above 680 on 27 May expiry.

Breakeven Point: Rs 660

Rationale:

-- We have seen long build-up in the Bharat Forge Futures during the May series till now where we have seen 7 per cent rise in the Open Interest with price rising by 7 per cent.

-- The stock's primary trend is positive where it is trading above all important moving averages

-- The stock price has already broken out from the downward slopping trendline on the daily chart

-- Plus DI is trading above Minus DI while ADX line is placed above 25, indicating momentum in the current uptrend

-- Oscillators like RSI and MFI is showing strength in the current uptrend

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Disclaimer: Nandish Shah is Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.