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Bull Spread Strategy on Indian Oil Corp by Nandish Shah of HDFC Securities

The stock price of IOC has broken out on the daily chart (Adjusted for dividend) where it closed at highest level since March 2020 with higher volumes

Topics
Stock calls | derivative strategy | Indian Oil Corp

Nandish Shah  |  Mumbai 

Indian Oil Corporation logo outside a fuel station in New Delhi. Photo: Reuters
The primary trend of the stock is positive

Bull spread Strategy on Indian Oil

Buy IOC Feb 100 Call at Rs 2.30 & simultaneously sell Feb 105 Call at Rs 0.95

Lot Size 6500

Cost of the strategy Rs 1.35 (Rs 8775 per strategy)

Maximum profit Rs 23725 If IOC closes at or above 105 on 25 Feb expiry.

Breakeven Point Rs 101.35

Rationale:

>> Long build up was seen in the IOC Futures’ where we have seen 12 per cent (Prov) rise in the Open Interest with price rising by 4 per cent.

>> The stock price has broken out on the daily chart (Adjusted for dividend) where it closed at highest level since March 2020 with higher volumes

>> Plus DI has crossed the Minus DI, indicating strength in the current uptrend

>> The primary trend of the stock is positive where it is trading above its all-important moving averages.

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Disclaimer: Nandish Shah is Technical Research Analyst at He doesn't hold any position in the stock. Views are personal
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First Published: Fri, February 19 2021. 08:08 IST
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