F&O Strategy: Nandish Shah recommends a Bull spread on Federal Bank

The technical analyst from HDFC Securities recommends buying Federal Bank 95 Call and simultaneously selling 100 Call for the June expiry.

BULL SPREAD Strategy on FEDERAL BANK

Buy FEDERAL BANK (30-June Expiry) 95 CALL at Rs 2.35 & simultaneously sell 100 CALL at Rs 1.10

Lot Size 10,000

Cost of the strategy Rs 1.25 (Rs 12,500 per strategy)

Maximum profit Rs 37,500 if Federal Bank closes at or above 100 on 30 June expiry.

Breakeven Point Rs 96.25

Rationales:

• We have seen long build up in the Federal Bank futures where we have seen 14 per cent addition in Open Interest (Prov) with Federal Bank rising by 3 per cent.
   
• Primary trend of the Federal bank turned positive as it has closed above its  200-day EMA. 
   
• Stock price has broken out from the downward sloping trendline, adjoining the highs of 04-April and 29-April 2022.
   
• Momentum Oscillators like RSI(11) and MFI(10) are sloping upwards and placed near 60, Indicating strength in the current uptrend.

Disclaimer: Nandish Shah is Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.