F&O Strategy: Nandish Shah of HDFC Securities recommends Bull Spread on SBI





BULL SPREAD Strategy on SBI


Buy (29-Sept Expiry) 550 CALL at Rs 12.7 & simultaneously sell 570 CALL at Rs 5.7


Lot Size 1,500


Cost of the strategy Rs 7 (Rs 10,500 per strategy)


Maximum profit Rs 19,500; if closes at or above Rs 570 on 29-Sept expiry day.


Breakeven Point Rs 557


Approx margin required Rs 39,000


Rationale:


We have seen long build up in the futures, where we have seen 1 per cent addition (Prov) in Open Interest with price rising by 2.5 per cent.


The stock price has broken out on the daily chart with higher volumes, where it closes at all time high levels.


The stock price has also broken out from the downward sloping trendline on the daily chart.


Momentum Oscillators like RSI (11) and MFI (10) are in rising mode and placed above 60 on the daily and weekly chart, indicating strength in the current uptrend.


The plus DI is trading above minus DI and ADX line has started rising upwards, indicating stock price is likely to gather momentum in the current uptrend.


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

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor





Source link

Comments are closed.