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BULL SPREAD Strategy on BANK NIFTY
Buy Bank Nifty (22-Dec Expiry) 43,500 CALL at Rs 525 & simultaneously sell 44,000 CALL at Rs 284
Lot Size 25
Cost of the strategy Rs 241 (Rs 6025 per strategy)
Maximum profit Rs 6,475; If Bank Nifty closes at or above 44,000 on 22-Dec expiry.
Breakeven Point Rs 43,741
Approx margin required Rs 22,000
Rationale:
We have seen long build up in the Bank Nifty futures on Thursday, where we have seen 14 per cent addition (Prov) in Open Interest with price rising by 1 per cent.
It has broken out from the narrow consolidation which held for previous 10 trading sessions.
Momentum Oscillators like RSI (11) and MFI (10) are placed above 60 on the daily chart, indicating strength in the current uptrend.
Plus DI is trading above minus DI while ADX line is placed above 25, indicating momentum 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.
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