F&O Strategy: Nandish Shah recommends a Bear Spread strategy on Nifty

The derivative analyst from HDFC Securities recommends this strategy based on the following four rationales

Bear spread Strategy on NIFTY

Buy NIFTY 17,800 PUT at Rs 122 & simultaneously sell 17,500 PUT at Rs 47 (EXPIRY 03 NOV)

Lot Size 50

Cost of the strategy Rs 75 (Rs 3,750 per strategy)

Maximum profit Rs 11,250 If NIFTY closes at or below 17,500 on 03 Nov expiry.

Breakeven Point Rs 17,725

Rationale:

• We have seen short build up in the Nifty Futures, where we have seen 23%(Prov) rise in the Open Interest with Nifty falling by 2%.
• Nifty has closed below its 20-day EMA, first time since 30-July 2021
• RSI and MFI Oscillators are placed below 60 and sloping downwards, Indicating strength in the current downtrend
• Nifty has breached the crucial support of its previous swing top of 17947 levels

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