Expert Insight: Nandish Shah’s Winning Bull Spread Strategy on Nifty Revealed | Market News & Trends
Derivative Strategy: Bull Spread on NIFTY
Date: August 30, 2024 | 6:38 AM IST
Strategy Overview:
A Bull Spread strategy is being recommended for NIFTY utilizing the September 5 Expiry options. The position involves buying a 25,200 Call option at Rs 140, while simultaneously selling a 25,500 Call option at Rs 30, resulting in a net cost of Rs 110 per share or Rs 2,750 per strategy (given a lot size of 25).
Key Metrics:
- Maximum Profit: Rs 4,750 if NIFTY closes at or above Rs 25,500 by the expiration date.
- Breakeven Point: Rs 25,310.
- Risk-Reward Ratio: 1:1.73.
- Margin Required: Approximately Rs 12,600.
Market Rationale:
The Nifty Futures market has experienced a long rollover, indicated by a significant increase in open interest as Nifty rose by 0.40%, closing at a new all-time high. The short-term trend remains bullish with Nifty positioned above its 5, 11, and 20-day Exponential Moving Averages (EMAs). Momentum indicators and oscillators show upward movement and are above 50 on the daily chart, signaling a continued bullish trend. Additionally, notable put writing is observed at 25,000-25,100 levels, reinforcing support.
Investor Advice:
It is advisable to book profits when the Return on Investment (ROI) exceeds 20%.
Disclaimer: Nandish Shah, a senior technical/derivative analyst at HDFC Securities, has authored this recommendation. The views expressed are his own.
First Published: August 30, 2024 | 6:26 AM IST
Original Story https://www.business-standard.com/markets/news/nandish-shah-of-hdfc-securities-recommends-bull-spread-on-nifty-details-124083000064_1.html
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