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Here's a Bear Spread Strategy on Nifty by Nandish Shah of HDFC Securities

Nifty has broken down on the daily chart where it closed below its 11-day EMA first time in the month of October

Topics
Nifty index | Derivatives strategy | Market technicals

Nandish Shah  |  Mumbai 

RSI and MFI Oscillator is showing negative divergence on the hourly chart
RSI and MFI Oscillator is showing negative divergence on the hourly chart

Bear Spread strategy on Nifty

Buy Nifty 22 Oct Expiry 11700 Put at Rs 145 & simultaneously sell 22 Oct Expiry 11400 Put at Rs 54

Lot Size 75.

Cost of the strategy Rs 90 (Rs 6750 per strategy)

Maximum profit Rs 15750 If Nifty closes at or below 11400 till 22 October expiry.

Break-even Point: 11,610

Rationale:

Short build up is seen in the Nifty Futures’ where we have seen 7%(Prov) rise in the Open Interest with Nifty falling by 2.4%.

Nifty has broken down on the daily chart where it closed below its 11-day EMA first time in the month of October

RSI and MFI Oscillator is showing negative divergence on the hourly chart

Index heavyweight sectors like IT and OIL/Gas sector turned weak on the short-term chart

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

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First Published: Fri, October 16 2020. 07:51 IST
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