F&O Strategy: Nandish Shah recommends this strategy for the May expiry

The derivative analyst from HDFC Securities recommends buying Kotak Bank 1,780 Put and simultaneously selling 1,760 Put for the May expiry.

BEAR SPREAD Strategy on KOTAK MAHINDRA BANK

Buy KOTAK BANK (26-May Expiry) 1,780 PUT at Rs 29 & simultaneously sell 1,760 PUT at Rs 20

Lot Size 400

Cost of the strategy Rs 9 (Rs 3,600 per strategy)

Maximum profit Rs 4400 If Kotak Mahindra Bank closes at or below 1760 on 26 May expiry.

Breakeven Point Rs 1771

Rationale:

• We have seen short buildup in the Kotak Bank futures where we have seen 7 per cent addition (Prov) with Kotak Bank falling by 3.5 per cent.
   
• Short term trend of the Kotak Bank turned negative as it has closed below its 5 and 20 day EMA. 
   
• Kotak Mahindra Bank Future has broken down from the upward sloping trendline, adjoining the lows of 25-April and 12-May 2022.
   
• Stock price has been taking resistance around the 200-day EMA.

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