Nandish Shah recommends a Bull Spread strategy on Bank of Baroda

The derivative analyst from HDFC Securities recomends this strategy based on the following five rationales.

Bull spread Strategy on BANK OF BARODA

Buy BANK OF BARODA OCT 95 CALL at Rs 4.5 & simultaneously sell 100 CALL at Rs 2.75

Lot Size 11700

Cost of the strategy Rs 1.75 (Rs 20475 per strategy)

Maximum profit Rs 38025 If BANK OF BARODA closes at or above 100 on 28 Oct expiry.

Breakeven Point Rs 96.75

Rationale:

• We have seen long build up in the Bank Of Baroda Futures, where we have seen 13%(Prov) rise in the Open Interest with price rising by 4%.
  

 

Stock price has already broken out from the symmetrical triangle on the daily chart.

 

RSI and MFI Oscillators are placed above 60 and sloping upwards, Indicating strength in the current uptrend.

 

Plus DI is trading above Minus DI while ADX line is placed above 25, Indicating momentum in the current uptrend.

 

PSU Bank as a sector is doing well

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