F&O Strategy: Bull Spread on SBI, recommends HDFC Securities

Buy SBI Rs 610 Call option and simultaneously Sell Rs 630 Call of the July series, suggests Nandish Shah, Sr. derivatives & technical research analyst of HDFC Securities.

Derivative Strategy

BULL SPREAD Strategy on SBI

Buy SBI (27-July Expiry) 610 CALL at Rs 7 & simultaneously sell 630 CALL at Rs 1.70

Lot Size 1,500

Cost of the strategy Rs 5.3 (Rs 7,950 per strategy)

Maximum profit Rs 22,050; If SBI closes at or above Rs 630 on 27 July expiry.

Breakeven Point Rs 615.3

Approx margin required Rs 32,000

Rationale:

• We have seen long build up in SBI Futures on Thursday, where we have seen 6 per cent addition in Open Interest (Prov) with price rising by 1.40 per cent.
   
• The stock price has broken out on the daily chart to close at highest level since 03-Jan 2023
   
• The stock price has been forming bullish higher top higher bottom formation on the weekly chart.
   
• RSI Oscillator (11) is in rising mode and placed above 60 on the daily chart suggesting strength in the current uptrend.

Note: It is advisable to book profit in the strategy when ROI exceeds 20 per cent.

 

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