Here's a Bull Spread Strategy on HPCL by Nandish Shah of HDFC Securities
Short term trend of HPCL stock has turned positive where it is trading above its 5 and 20-day EMA
Bullish engulfing pattern is formed with higher volumes on the daily chart
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 per cent rise in the Open Interest (Prov) with HPCL rising by 5 per cent.
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.