Analyst suggests 'Bull Spread' on Midcap Nifty Sept expiry; check strategy
Long build up is seen in the Midcap Nifty Futures where Open interest rose by 6 per cent along with a price rise of 0.60 per cent
 "Analyst suggests 'Bull Spread' on Midcap Nifty Sept expiry; check strategy")
Derivative Strategy
Bull Spread Strategy on Midcap Nifty
1) Buy MIDCPNIFTY (30-Sept Expiry) 13,300 CALL at ₹120 & simultaneously sell 13,400 CALL at ₹74
Lot Size: 140
Cost of the strategy: ₹46 (₹6,440 per strategy)
Maximum profit: ₹7,560 If MIDCP NIFTY closes at or above 13,400 on 30 Sept expiry.
Breakeven Point: ₹13,346
Risk Reward Ratio: 1:1.17
Approx margin required: ₹37000
Rationale:
- Long build up is seen in the MIDCP NIFTY Futures where Open interest rose by 6 per cent along with a price rise of 0.60 per cent
- Primary trend of the MIDCAP NIFTY remains positive as it is placed above its 100 and 200-day EMA.
- Index has broken out from the downward sloping trendline on the daily and weekly charts.
- MIDCP NIFTY Open Interest Put call ratio increased to 1.22 level from 1.09 levels on the back of Put writing at 13,000-13,200 levels.
- FIIS long-to-short ratio in the Index Futures stands at an oversold level of 1.11, suggesting a higher possibility of a short covering by them in the coming days.