Nandish Shah of HDFC Securities suggests ‘Bull Spread’ strategy on Nifty
Source: Business Standard
Derivative Strategy
BULL SPREAD Strategy on NIFTY
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1) Buy Nifty (03-Oct Expiry) 26200 Call at Rs 140 & simultaneously sell 26500 Call at Rs 40
Lot Size: 25
Cost of the strategy: Rs 100 (Rs 2,500 per strategy)
Maximum profit: Rs 5,000 If Nifty closes at or above Rs 26,500 on 03 Oct expiry.
Breakeven Point: Rs 26,300
Risk Reward Ratio: 1: 2
Approximately margin required: Rs 13,000
Rationale:
— Long rollover is seen in the Nifty Futures, where we have seen sharp rise in the open interest with Nifty rising by 0.81% to close at yet another new all time high.
— Short term trend of the Nifty remains bullish as it is placed above its 5, 11 and 20 day EMA.
— Momentum Indicators and Oscillators are in rising mode and placed above 60 on the weekly chart, indicating bullish trend.
— Amongst the NIFTY options, Put writing is seen at 26000-26200 levels.
(Disclaimer: Nandish Shah is a senior technical/derivative analyst at HDFC Securities. Views expressed are his own.)
First Published: Sep 27 2024 | 6:25 AM IST
