Buy BPCL 350 call; sell 370 Call, says VK Sharma

VK Sharma of HDFC Securities told CNBC-TV18, "Qualitatively, Reliance Industries (RIL) has come out better results where the other income was less and petrochemical margins had improved but I feel that this stock has already gone up for three consecutive days, so in building positions may be slightly risky. Crude having come down, I do not think Oil and Natural Gas Corporation (ONGC) is a good bet but we can look at Bharat Petroleum Corporation (BPCL); its an oil marketing company (OMC) where we saw positions being built to the extent of 2 percent, marginally it went up by 1 percent."

"I am suggesting constructing a bull spread where one can buy 350 Call, it was available at Rs 10; sell 370 Call at Rs 4. Cost of construction of this bulls spread comes to 6 and overall profit, maximum profit is 14. When I say maximum profit, it doesn't necessarily mean it will happen but this is what at the most can happen. So, with a ratio of 1:2.3 the risk reward ratio is fairly okay in terms of bull spread here," he said. At 10:26 hrs Bharat Petroleum Corporation was quoting at Rs 353, up Rs 5.55, or 1.60 percent. It has touched an intraday high of Rs 353.65 and an intraday low of Rs 350. The share touched its 52-week high Rs 449 and 52-week low Rs 256.00 on 21 January, 2013 and 06 August, 2013, respectively. Currently, it is trading 21.38 percent below its 52-week high and 37.89 percent above its 52-week low. Market capitalisation stands at Rs 25,524.87 crore.