F&O Call: Nandish Shah recommends Bear Spread strategy on Federal Bank

The derivative analyst from HDFC Securities recommends to Buy Federal Bank 128 Put and simultaneously Sell 125 Put for the December expiry.

Derivative Strategy

BEAR SPREAD Strategy on FEDERAL BANK

Buy FEDERAL BANK (29-Dec Expiry) 128 PUT at Rs 2.40 and simultaneously sell 125 PUT at Rs 1.4

Lot Size 5,000

Cost of the strategy: Rs 1 (Rs 5,000 per strategy)

Maximum profit: Rs 10,000; If Federal bank closes at or below Rs 125 on 29-Dec expiry.

Breakeven Point: Rs 127

Approx margin required: Rs 22,350

Rationale:

We have seen short build up in the Federal bank Futures on Thursday, where we have seen 7 per cent addition (Prov) in Open Interest with price falling by 2.6 per cent.

The stock price has broken below the upward sloping trendline, adjoining the lows