F&O Cues: Here's how to trade Bank Nifty with a 'Bear Spread' strategy
Profit booking is seen in the Bank Nifty Futures where Open interest fell by 1 per cent along with a fall of 0.61 per cent
 "F&O Cues: Here's how to trade Bank Nifty with a 'Bear Spread' strategy")
Derivative Strategy
BEAR SPREAD Strategy on BANK NIFTY
1) Buy BANKNIFTY (25-November Expiry) 58,000 PUT at ₹532 & simultaneously sell 57,500 PUT at ₹369
- Lot Size 35
- Cost of the strategy ₹163 (₹6,930 per strategy)
- Maximum profit ₹11,795 If BANK NIFTY closes at or below 57,500 on 25 November expiry.
- Breakeven Point ₹57,837
- Risk Reward Ratio 1:2.07
- Approx margin required ₹41,000
Rationale:
- Profit booking is seen in the Bank Nifty Futures where Open interest fell by 1 per cent along with a fall of 0.61 per cent.
- Short term trend of the Bank Nifty turned weak as it closed below 5 day EMA
- Bank Nifty Open Interest Put Call ratio fell to 0.98 level from 1.08 levels on the back of Call writing at 58,000-58,500 levels.
- Momentum Indicator – RSI has fallen below the level made on 24-October, suggesting weakening of current uptrend.