F&O Setup today: Here's how to trade Nifty with a Bull Spread strategy

BULL SPREAD Strategy on NIFTY: Long build up is seen in the Nifty Futures during the week, where Open interest rose by 2.5 per cent along with price rise of 1 per cent

Derivative Strategy

BULL SPREAD Strategy on NIFTY

Buy NIFTY (28-August Expiry) 24,800 CALL at Rs 143 & simultaneously sell 25000 CALL at ₹76

Lot Size 75

 

Cost of the strategy ₹67 (₹5,025 per strategy)

 

Maximum profit ₹9,975 If NIFTY closes at or above 25,000 on August 28 expiry.

 

Breakeven Point 24,867

 

Risk Reward Ratio 1: 2

 

Approx margin required ₹37,000  CATCH STOCK MARKET UPDATES TODAY LIVE

Rationale:

• Long build up is seen in the Nifty Futures during the week, where Open interest rose by 2.5 per cent along with price rise of 1 per cent
• Primary trend of the Nifty remains positive as it is placed above its 200-day EMA
• Put writing is seen at 24,500-24,600 levels.

• FIIS long to short ratio in the Index Futures stands at an oversold level of 0.09, suggesting higher possibility of a short covering by them in the coming days.

(Disclaimer: Nandish Shah is a senior technical/derivative analyst at HDFC Securities. Views expressed are his own.)