Derivatives strategy on IDFC First Bank by HDFC Securities

Derivative call by Nandish Shah, Technical Analyst, HDFC securities

Bull Spread strategy on IDFCFIRST BANK

Buy IDFC FIRST BANK December 45 Call at Rs 1.50 & simultaneously sell 48 call at Rs 0.6

Lot Size: 12,000.

Cost of the strategy Rs 0.90 (Rs 10,800 per strategy)

Maximum profit Rs 25,200 if IDFC First Bank closes at or above 48 on December expiry.

Break-even Point Rs 45.9

Rationale:

-- We have seen accumulation of Long positions in the IDFC Bank Futures’ from lower levels during the October November series where open interest (OI) in the IDFC Bank future’s at the beginning of the series stood above 20 crore shares as against last twelve series average OI of 13.35 cr shares.
 

-- Stock price has already given breakout from the downward slopping trendline, adjoining the high of week ending 05 April 2019, 23 August 2019, and 27 September 2019.
 

-- Oscillators and Momentum Indicators like RSI and MACD showing strength in the stock on the weekly charts.

-- In the option segment, we have seen addition of 16 lakh Shares and 7.5 lakh shares in the 45 and 48 strike Call Option respectively, suggesting further upside from hereon.