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

The derivative analyst from HDFC Securities recommends buying Infy 1,600 Call and simultaneously selling 1,640 Call for the May expiry.

BULL SPREAD Strategy on Infy

Buy INFY (26-May Expiry) 1,600 CALL at Rs 32 & simultaneously sell 1,640 CALL at Rs 18

Lot Size 300

Cost of the strategy Rs 14 (Rs 4,200 per strategy)

Maximum profit Rs 7,800 If Infy closes at or above 1,640 on 26 May expiry.

Breakeven Point Rs 1,618

Rationale:

• We have seen long buildup in the Infy futures where we have seen 2% addition (Prov) with Infy rising by 3%.
   
• Short term trend of the Infosys turned positive as it has closed above its 5 day EMA. 
   
• RSI oscillator has exited oversold zone with positive divergence, Indicating probable bullish reversal

Disclaimer: Nandish