Derivative Strategy
Bull Spread Strategy on Bharat Forge
Buy Bharat Forge (25-Jan Expiry) 880 Call at Rs 30 & simultaneously sell 900 Call at Rs 21
Lot Size 1,000
Cost of the strategy Rs 9 (Rs 9,000 per strategy)
Maximum profit Rs 11,000; If Bharat Forge closes at or above 900 on 25-Jan expiry.
Breakeven Point Rs 889
Approx margin required Rs 30,800
Rationale:
-
We have seen long rollover in the Bharat Forge Futures on Thursday, where we have seen 5 per cent addition (Prov) in Open Interest with price rising by 0.50 per cent.
-
The stock price has broken out on the monthly chart to close at an all-time high.
-
The primary trend of the stock is positive as stock price is trading above its 100 and 200 day EMA.
-
Momentum Oscillators like RSI (11) and MFI (10) are placed above 60 on the monthly chart, indicating strength in the current uptrend.
Note : It is advisable to book profit in the strategy when ROI exceeds 20 per cent.
Disclaimer: Nandish Shah is Sr. Derivatives & Technical Research Analyst at HDFC Securities. He doesn’t hold any position in the stock. Views are personal.
Stay connected with us on social media platform for instant update click here to join our Twitter, & Facebook
We are now on Telegram. Click here to join our channel (@TechiUpdate) and stay updated with the latest Technology headlines.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.
Denial of responsibility! NewsAzi is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.
