Bear Spread Strategy on Nifty
Buy Nifty (expiry November 9) 18,800 PUT at Rs 139.9 and simultaneously sell 18,500 PUT at Rs 62.55
Lot size: 50
Cost of the strategy: Rs 77.35 (Rs 3,868 per strategy)
Maximum profit Rs 11,132 if Nifty closes at or below Rs 18,500 on November 9.
Break-even point: Rs 18,722
Risk-reward ratio: 1:2.88
Estimated margin required: Rs 19,000
Rode:
>> A short rollover is seen in the Nifty Futures to the November series, where open interest rose 14 percent on Thursday and Nifty fell 1.39 percent.
>> Nifty has moved off the uptrend line, bordering the lows of August 31 and October 4.
>> The short-term trend of the Nifty is weak as it is below the 5.11 and 20-day EMA.
>> Among nifty options, aggressive call writing is seen at 19,000-19,200 levels.
Disclaimer: Nandish Shah is a senior derivatives and technical analyst at HDFC Securities. The opinions expressed are our own. He has no position in the index.
First print: October 27, 2023 | 6:45 am IST