Sahaj Agrawal of Kotak Securities suggest 'Bull Call Spread' on Nifty50

Recommended Strategy:

• Strategy: Nifty Bull Call Spread
• Expiry: 27 March 2025
• Strike Prices: Buy 23400CE & Sell 23600CE
• Net Premium Outflow: ~35
• Stop Loss: 10
• Target: 100

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Rationale:

• A trendline breakout above 23100 was seen on Thursday, indicating a short-term reversal in the technical structure.
• The breakout has the potential to propel Nifty towards the next major supply area at around 23600, which is derived from the 38.2 per cent. Retracement of entire fall from all-time high at 26,277 upto the recent lows at 21,965.
• Given the breakout and the potential for elevated volatility, a Bull Call Spread is an optimal strategy to capitalise on the expected upside while maintaining a defined risk structure.
• With momentum firmly on the upside, Nifty is likely to move towards 23,600 in the coming week, with a possibility of extending gains further if broader market strength continues.
• This strategy aligns with the prevailing conservative bullish outlook, offering an optimal risk-reward setup in current market conditions.

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(Disclaimer: This article is by Sahaj Agrawal, senior vice president, head of derivatives research of Kotak Securities. Views expressed are his own.)