Derivative strategy from HDFC Securities: Buy IDFC First Bank

Views on derivative call by Nandish Shah, Senior Technical & Derivative Analyst, HDFC securities.

Bull Spread strategy on IDFC FIRST BANK

Buy IDFC FIRST BANK AUGUST 43 Call at Rs 1.10 & simultaneously sell 45 call at Rs 0.5
 

Lot Size 12000.
 

Cost of the strategy Rs 0.60 (Rs 7200 per strategy)
 

Maximum profit Rs 16800 If IDFC First Bank closes at or above 45 on August expiry.
 

Break even Point Rs 43.6

Rationale:

Long build up is seen in the IDFC First Bank Futures’ during the series till now, where we have seen more than 10% rise in Open Interest with price rising by 9%.
 

Stock price gave bullish breakout from the downward slopping trendline, adjoining the high of 01-April 2018 and 04-July 2018.
 

Oscillators and Momentum Indicators like RSI and MACD showing strength in the stock on the daily and weekly charts.
 

In the option segment, we have seen addition in 43 strike Call Option