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Derivative Strategy
Bull Spread Strategy on Bank Nifty
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Buy Bank Nifty(18-September Expiry) 51,800 Call at Rs 251 & simultaneously sell 52,300 Call at Rs 93
Lot Size 15
Cost of the strategy Rs 158 (Rs 2370 per strategy)
Maximum profit Rs 5,130 If Bank Nifty closes at or above Rs 52,300 on 18 Sept expiry.
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Breakeven Point Rs 51,958
Risk Reward Ratio 1: 2.16
Approx margin required Rs 15,500
Rationale:
-- Short covering is seen in the Bank Nifty Futures, where we have seen 9 per cent fall in the open interest with Bank Nifty rising by 1.49 per cent.
-- Bank Nifty has broken out from the downward sloping trendline adjoining the highs of 04-July-2024 and 03-Sept-2024
-- Short term trend of the Bank Nifty turned positive as it has closed above its 5, 11 and 20 day EMA.
-- Momentum Indicators and Oscillators are in rising mode and placed above 50 on the daily chart, indicating bullish trend.
- Amongst the Bank NIFTY options, Put writing is seen at 51,000-51,500 levels.
Note : It is advisable to book profit in the strategy when ROI exceeds 20%.
(Disclaimer: Nandish Shah is a senior technical/derivative analyst at HDFC Securities. Views expressed are his own.)
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