IndusInd Bank: Adopt a bear spread strategy for the August expiry

Short build up seen in Indusind bank Futures on Thursday, with a 2 per cent addition in Open Interest (Prov) and price falling 1.21 per cent: HDFC Securities

BEAR SPREAD Strategy on INDUSIND BANK

Buy INDUSIND BANK (August 31-Expiry) 1370 PUT at Rs 33.4 & simultaneously sell 1320 PUT at Rs 14.25

Lot Size: 500

Cost of the strategy: Rs 19.15 (Rs 9,575 per strategy)

Maximum profit Rs 15,425 If Indusind bank closes at or below Rs 1320 on 31 Aug expiry.

Breakeven Point: Rs 1,350

Approx margin required: Rs 24,000

Rationale:

>> We have seen short build up in Indusind bank Future on Thursday, where we have seen 2 per cent addition in Open Interest (Prov) with price falling by 1.21 per cent.

>> Stock price has broken down on the daily chart to close at the lowest level since July 7, 2023

 

>> Short term trend of the stock is weak as stock price is trading below its 5,11 and 20 day EMA.

>> Oscillators like RSI (11) and MFI (10) are in falling mode and placed below 50 on the daily chart, suggesting strength in the current downtrend.

NOTE: It is advisable to book profit in the strategy when ROI exceeds 20%.

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