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Derivative strategy

Call writing at 24500 could restrict its upside towards 24500-24600

Chandan Taparia  |  Mumbai 

PSU, banks, merger

Strategy:

BANK NIFTY : BULL CALL SPREAD

BUY 1 LOT OF 24300 CALL @ 181

SELL 1 LOT OF 24600 CALL @ 64

BEP :

MAX RISK : 117 POINTS, Rs. 4680

MAX REWARD : 182 POINTS, Rs. 7320

Rationale:

1. It has managed to hold above 24000 zones even after the selling pressure in last two week

2. It has respected to its 50 DEMA and surpassed its falling supply trend line

3. Intact Put open interest at 24000 and fresh Put writing at higher strikes suggests an up move

4. Call writing at 24500 could restrict its upside towards 24500-24600

5. Thus a low risk, Bull Call Spread is recommended

Disclaimer: The analyst may have positions in any or all the stocks mentioned above.

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First Published: Mon, August 28 2017. 07:50 IST
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