Bank Nifty: HDFC Securities recommends this F&O strategy for 03-Aug expiry

Buy Bank Nifty 45,500 Put option and simultaneously Sell 45,500 Call of the 03-August expiry, suggests Nandish Shah, Sr. derivatives & technical research analyst at HDFC Securities.

Derivative Strategy

Bear Spread strategy on BANK NIFTY

Buy BANK NIFTY (03-Aug Expiry) 45,500 PUT at Rs 154 & simultaneously sell 45,500 CALL at Rs 59

Lot Size 15

Cost of the strategy: Rs 95 (Rs 1,425 per strategy)

Maximum profit: Rs 6,075 If BANK NIFTY closes at or below 45,000 on 03 August expiry.

Breakeven Point: 45,405

Risk Reward Ratio 1:4.26

Approx margin required Rs 14,000

Rationale:

• The short term trend of the Bank Nifty turned weak as it closed below 5-day EMA.
   
• The Bank Nifty has formed bearish engulfing pattern on the daily chart.
   
• RSI has given negative crossover on the daily chart.
   
• Amongst the Bank Nifty options, Call writing is seen at 46,000 - 46,500 levels.

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

 

Disclaimer: Nandish Shah is Sr. Derivatives & Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.