Nandish Shah recommends a Bull spread on SBI for February series

According to Nandish Shah, the short term trend is bullish as the stock price is closed above all important short- term moving averages.

Bull spread strategy on SBI
 

1) Buy SBI Feb 540 CALL at Rs 21.4 and simultaneously sell 580 CALL at Rs 8.4
 

Lot Size 1,500
 

Cost of the strategy Rs 13 (Rs 19,500 per strategy)
 

Maximum profit Rs 40,500 if SBI closes at or above 580 on 24 Feb expiry.

Breakeven Point Rs 553
 

Rationale:

• We have seen long rollover to the Feb series where, where we have seen 25 per cent (Prov) rise in the Open Interest with price rising by 3 per cent.
• The stock price has broken out on the daily chart from the downward sloping trendline, adjoining the highs of 03-Nov-21 and 20-Jan-22.
• Short term trend is bullish as the stock price is closed above all important short- term moving averages.
• RSI Oscillators is placed at 60 and sloping upwards, indicating strength in the current uptrend.

Disclaimer: Nandish Shah, Senior Derivative & Technical Analyst, HDFC securities. Views personal.