F&O Radar | Deploy Bull Call Spread in BDL shares to gain from a bullish setup

The shares of Bharat Dynamics Ltd (BDL) witnessed a notable recovery from their recent lows, posting a gain of more than 7.5% over the past week. The price action has led the stock to move above its 21-day Exponential Moving Average (EMA), a key technical indicator often associated with improving underlying strength.This upward move has been supported by higher trading volumes, suggesting growing investor participation.“In addition, the Relative Strength Index (RSI), a widely tracked momentum indicator, has shown a positive crossover on the daily chart, further reinforcing the stock’s short-term bullish outlook,” noted Amruta Shinde, Research Analyst at Choice Broking.On the derivatives front, she noted that the highest call open interest (OI) is currently placed at the Rs 1,520 strike, which is likely to act as a near-term resistance level.On the downside, the Rs 1,460 strike holds the highest put OI, thereby establishing a strong support zone at that level.“Over the past few sessions, the stock has also seen long build-up activity, a pattern that indicates continued optimism and signals that the positive momentum may sustain in the near term,” Shinde added.Given this, Amruta Shinde recommends traders to deploy a Bull Call Spread in BDL shares to gain from this bullish setup.Bull Call SpreadTraders may deploy a Bull Call Spread to monetise gains from a potential market rebound. It involves buying and selling call options with the same expiration but different strike prices. The purchased call is typically in-the-money (ITM) or at-the-money (ATM), while the sold call is out-of-the-money (OTM). This strategy results in a net debit for the trader, as the cost of the ITM/ATM call is partially offset by the cash flow generated from shorting the OTM call.126185182(Prices as of December 24)(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)