Analyst recommends 'Bull Spread' on Bank Nifty & PFC; detailed analysis
Derivative strategy: How trade Bank Nifty and PFC today? Nandish Shah of HDFC Securities explains
 "Analyst recommends 'Bull Spread' on Bank Nifty & PFC; detailed analysis")
Derivative strategy:
BULL SPREAD Strategy on BANK NIFTY
- Buy BANKNIFTY (31-July Expiry) 57,500 CALL at ₹790; simultaneously sell 58,500 CALL at ₹412
- Lot Size 35
- Cost of the strategy ₹378 (₹13,230 per strategy)
- Maximum profit ₹21,770 If BANK NIFTY closes at or above 58,500 on 31 July expiry.
- Breakeven Point ₹57,878
- Risk Reward Ratio 1:1.65
- Approx margin required ₹40,000
Rationale:
- Long rollover is seen in the Bank Nifty futures to the July series, where we have seen sharp rise in open interest with Bank Nifty rising by 1.03 per cent to close at all time high levels.
- The short-term trend of the Index is positive as it is placed above its 5,11 and 20-day EMA.
- The stock price has been forming bullish higher top higher bottom formation on the daily chart.
- Bank Nifty Put Call ratio has moved up to 1.05 levels from 0.99 on the back of aggressive Put writing at 56,000-57,000 levels.
BULL SPREAD Strategy on PFC
- Buy PFC (31-July Expiry) 430 CALL at ₹11.70; simultaneously sell
- 450 CALL at ₹ 5.5
- Lot Size 1,300
- Cost of strategy ₹6.2 (₹8,060 per strategy)
- Maximum profit ₹17,940 If PFC closes at or above ₹450 on 31 July expiry.
- Breakeven Point ₹436.2
- Risk Reward Ratio 1:2.23
- Approx margin required ₹19,000
Rationale:
- A long build-up is seen in the PFC Futures, where we have seen a 19 per cent rise in open interest with the price rising by 1.80 per cent.
- Short-term trend remains positive, as the PFC stock price is placed above its 5,11 and 20-day EMA.
- The stock price has formed a strong base by taking support around 100 week EMA multiple times.
- The RSI oscillator is in rising mode and placed above 60 on the daily chart, indicating strength in the current uptrend.