F&O Strategy: Nandish Shah recommends a Bull spread on the weekly Nifty

The derivative analyst from HDFC Securities recommends buying Nifty 17,300 Call and simultaneously selling 17,500 Call for the May 05 expiry.

Bull spread Strategy on Nifty

Buy Nifty (05-May Expiry) 17,300 CALL at Rs 133 & simultaneously sell 17,500 CALL at Rs 58

Lot Size 50

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

Maximum profit Rs 6,250 If Nifty closes at or above 17,500 on 05 May expiry.

Breakeven Point Rs 17,375

Rationale:

• We have seen long rollover in the Nifty futures to the May series where we have seen 22 per cent addition (Prov) with Nifty rising by 1.20 per cent.
   
• The Nifty has formed higher top formation preceded by higher bottom, which indicates higher probability of markets extending the gains.
   
• The short term trend of the Nifty turned positive as Nifty has closed above its 5 and 20-day EMA. 
   
• The Nifty has taken support around 200-day EMA multiple times during the last few days.

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