Business Standard

Options Trading: HDFC Securities recommends Bull Spread on ONGC

Buy ONGC 190 Call option and simultaneously Sell 195 Call of the September series, recommends Nandish Shah, Sr. derivatives & technical research analyst of HDFC Securities.

markets, market, trading, trading call, buy, sell, buy sell, stocks, stock
Web Exclusive

Nandish Shah Mumbai

Listen to This Article

Derivative Strategy

BULL SPREAD Strategy on ONGC

Buy ONGC (28-Sept Expiry) 190 CALL at Rs 2.40 & simultaneously sell 195 CALL at Rs 1.30

Lot Size: 3,850

Cost of the strategy: Rs 1.10 (Rs 4,235 per strategy)

Maximum profit: Rs 15015; If ONGC closes at or above Rs 195 on 28 Sept expiry.

Breakeven Point: Rs 191.5

Risk Reward Ratio: 1:3.55

Approx margin required: Rs 25,300

Rationale:
  • Long build up is seen in the ONGC Futures on Thursday where Open Interest surged by 17 per cent (Prov) with price rising by 2.2 per cent.
     
  • Stock price has broken out on the daily and weekly chart to close at five year high.
     
  • Stock price has been  forming bullish higher top  higher bottom candlestick pattern on the weekly and  monthly chart.
     
  • Oscillators like RSI(11) and MFI(10) are slopping upwards and placed above 60 on the daily and weekly chart, Indicting strength in the stock.
Note : It is advisable to book profit in the strategy when ROI exceeds 20%.
 

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

 

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Sep 15 2023 | 7:31 AM IST

Explore News