How to trade amid volatility? Here's one strategy to capture any recovery

Suggested Strategy: 

• Strategy: Nifty Bull Call Spread
• Expiry: 9 APR 2025
• Strikes: Buy 22500CE and Sell 22800CE
• Net Outflow: 90
• Stop Loss: 45
• Strategy Target: 250

   Rationale: 

• Nifty staged a sharp rebound post Monday’s gap-down, with the multi-support zone at 21,800–21,700 (Mar–May 2024 lows) holding steady.
• The open nearly coincided with the day’s low at 21,743, while the close near the upper end of the daily candle adds significance.
• Micro-structure charts indicate a potential Double Bottom, with 21,800 tested twice intraday, separated by a valley peak at 22,190.
• Sustaining above 22,200 could fuel a short-covering rally towards the gap zone near 22,800.
• With volatility spiking, a Bull Call Spread is recommended to capture the anticipated recovery while maintaining a defined risk-reward framework.

  

(Disclaimer: Sahaj Agrawal is a senior vice president and head of derivatives research at Kotak Securities.)