 "F&O Strategy: Bull Spread trades on Nifty Midcap, Biocon explained")
Bull Spread strategy on MIDCP NIFTY
Buy MIDCP NIFTY (31-July Expiry) 13,500 Call at ₹261 and simultaneously sell 13,700 Call at ₹165
Lot size: 140
Cost of the strategy: ₹96 (₹13,440 per strategy)
Maximum profit: ₹14,560, if MIDCP NIFTY closes at or above 13,700 on 31 July expiry.
Breakeven point: ₹13,596
Risk reward ratio: 1: 1.10
Approx margin required: ₹38,000
Also Read
Rationale:
- Long build-up is seen in the MIDCP NIFTY futures during the series till now, where open interest has risen by 3 per cent, with it rising by 1 per cent.
- The primary trend of the MIDCP NIFTY is positive as it is placed above its 50 and 100-day EMAs.
- It has been forming a bullish higher top, higher bottom formation on the daily chart.
- It has broken out from the downward sloping trendline on the weekly charts.
- The short-term trend of the index is positive as it is placed above its 5,11, and 20-day EMAs.
Bull Spread strategy on Biocon
Buy Biocon (31-July Expiry) 380 Call at ₹9.4 and simultaneously sell 390 Call at ₹5.9
Lot size: 2500
Cost of strategy: ₹3.5 (₹8750 per strategy)
Maximum profit: ₹16,250, if Bioson closes at or above ₹390 on 31 July expiry.
Breakeven point: ₹383.5
Risk reward ratio: 1:1.86
Approx margin required: ₹33,000
Rationale:
- Long build-up is seen in the Biocon Futures during the July series till now, where we have seen a 5 per cent rise in open interest with price rising by 7 per cent.
- Short-term trend remains positive, as the Biocon stock price is placed above its 5,11 and 20 day EMAs.
- The stock price has been forming a bullish higher top, higher bottom formation on the daily chart.
- RSI and MFI oscillators are in rising mode and placed above 60 on the daily chart, indicating strength in the current uptrend.
Note: It is advisable to book profit in the strategy when ROI exceeds 20 per cent.
(Disclamier: This article is by Nandish Shah, senior technical/derivative analyst at HDFC Securities. Views expressed are his own.)