Derivatives strategy on Bharat Electronics by HDFC Securities

Derivative call by Nandish Shah, Technical Analyst, HDFC securities.

Bull Spread strategy on BEL

Buy BEL OCTOBER 115 Call at Rs 3.70 & simultaneously sell 125 call at Rs 0.70

Lot Size  6000.
 

Cost of the strategy Rs 3 (Rs 18000 per strategy)
 

Maximum profit Rs 42000 If BEL closes at or above 125 on October expiry(31-Oct)
 

Break even Point Rs 118

         

Rationale:

•  
• Long build up is seen in the BEL Futures’ during the October series till now, where we have seen more than 20% rise in Open Interest with price rising by 4.5 per cent.
   
• In the option segment, we have seen significant addition in 120 strike Call Option during the last few days, suggesting Call buying.
   
• Stock price has already broken out on the weekly chart by closing above the resistance level of 113
   
• Oscillators and Momentum Indicators like RSI and MACD showing strength in the stock on the daily and weekly charts.
   
• Stock price is trading above its 5,20 and 200 day sma, Indicating positive trend in all the time frames