Here's a Bull Spread Strategy on HPCL by Nandish Shah of HDFC Securities

Short-term trend of Hindustan Petroleum Corporation Ltd's (HPCL's) stock has turned positive where it is trading above its 5 and 20-day EMA

Bull spread Strategy on HPCL

Buy HPCL 180 Call at Rs 11.80 & simultaneously sell 200 Call at Rs 4.8

Lot Size 2700. 

Cost of the strategy Rs 7 (Rs 18900 per strategy)

Maximum profit Rs 35100 If HPCL closes at or above 200 till 26 November expiry.

Breakeven Point Rs 187

Rationale:

 Long build up is seen in the HPCL Futures’ where we have seen 23% rise in the Open Interest (Prov) with HPCL rising by 5%.

 Bullish engulfing pattern is formed with higher volumes on the daily chart

 Short term trend of the stock has turned positive where it is trading above its 5 and 20-day EMA

 RSI Oscillator has formed positive divergence Indicating probable trend reversal

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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.