F&O Cues: Analyst suggests 'Bull Spread' on Bank Nifty, PFC; check details
F&O strategy: Primary trend of the Bank Nifty remains positive as it is placed above its 50 and 100 day EMA
 "F&O Cues: Analyst suggests 'Bull Spread' on Bank Nifty, PFC; check details")
Derivative Strategy
BULL SPREAD Strategy on BANK NIFTY
- Buy BANKNIFTY (31-July Expiry) 57,500 CALL at ₹497 and simultaneously sell 58,000 CALL at ₹319
- Lot Size: 35
- Cost of the strategy ₹178 (₹6,230 per strategy)
- Maximum profit ₹11,270 If BANK NIFTY closes at or above 58,000 on 31 July expiry.
- Breakeven Point ₹57,678
- Risk Reward Ratio 1:1.81
- Approx margin required ₹40,000
Rationale:
- Primary trend of the Bank Nifty remains positive as it is placed above its 50 and 100 day EMA
- Short term trend of the Index is positive as it is placed above its 20 day EMA
- It has been forming bullish higher top higher bottom formation on the weekly chart.
- Put writing is seen at 56,500-57,000 levels.
- FIIS long to short ratio in the Index Futures stands near oversold level, suggesting higher possibility of a short covering by them in the coming days.
BULL SPREAD Strategy on PFC
- Buy PFC (31-July Expiry) 430 CALL at ₹12 and simultaneously sell 450
- CALL at ₹4.80
- Lot Size 1,300
- Cost of strategy ₹7.2 (₹9,360 per strategy)
- Maximum profit ₹16,640 If PFC closes at or above ₹450 on 31 July expiry.
- Breakeven Point ₹437.2
- Risk Reward Ratio 1:1.78
- Approx margin required ₹19,500
Rationale:
- Long build up is seen in the PFC Futures, where we have seen 6 per cent rise in open interest with price rising by 2.80 per cent.
- Short term trend remains positive, as the stock price is placed above its 5, 11 and 20 day EMA.
- Primary trend turned positive as stock price closed above its 200 day EMA.
- Oscillators like RSI and MFI are in rising mode and placed above 60 on the daily chart, indicating strength in the current uptrend.