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Derivative Strategy
BEAR SPREAD Strategy on NIFTY
Buy NIFTY (12-October Expiry) 19500 PUT at Rs 126.55 & simultaneously sell 19300 PUT at Rs 73.85
Lot Size: 50
Cost of the strategy: Rs 52.7 (Rs 2,635 per strategy)
Maximum profit: Rs 7365; If NIFTY closes at or below Rs 19,300 on 12-Oct expiry.
Breakeven Point: Rs 19,447
Risk Reward Ratio: 1:2.8
Approx margin required: Rs 20,000
Rationale:
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Short rollover is seen in the Nifty Futures on Thursday where Open Interest rose by 30% (Prov) with Nifty falling by 1 per cent.
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Short term trend of the Nifty turned weak as it has closed below its 5-, 11- and 20-day EMA.
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Amongst the Nifty options, Call writing is seen at 19,500 - 19,600 levels.
- Momentum Oscillators like RSI(11) and MFI(10) are in falling mode and placed below benchmark level of 50, indicting bearish trend.
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.
