F&O Strategy: HDFC Securities Recommends Bear Spread on Bank Nifty

Derivative strategy

BEAR SPREAD Strategy for BANK NIFTY

Buy BANK NIFTY (expiry April 24) 47,000 PUT for Rs 333 and simultaneously sell 46,600 PUT for Rs 200

Lot size 15

Cost of the strategy Rs 133 (Rs 1,995 per strategy)

Maximum profit Rs 4,005; If BANK NIFTY expires at or below Rs 46,600 on April 24.

Break-even point: Rs 46,867

Risk-reward ratio: 1:2

Estimated margin required: Rs 14,100

Rode:

• Short build-up is seen in the BANK NIFTY Futures where Open Interest rose 10 percent (Prov) while Bank Nifty fell 0.87 percent.

• The short-term trend of the Bank Nifty is weak as it has remained below the 11-day and 20-day EMA.

• Momentum indicators and oscillators are sloping downward and are around 40 on the daily chart, indicating weakness in the Index.

• Among BANK NIFTY options, Callwriting is seen at levels of 47,500-48,000.

Note: It is advisable to book profits in the strategy when the ROI exceeds 20%.

Disclaimer: Nandish Shah is a Senior Derivatives and Technical Research Analyst at HDFC Securities. He has no position in the shares. Opinions are personal.

First print: April 19, 2024 | 6:36 am IST