Nandish Shah, deputy vice president at HDFC Securities, has recommended a Bull Spread strategy on Nifty for the August 11 expiry. According to reports from Business Standard, the strategy involves buying Nifty 24300 Call at ₹190 and simultaneously selling 24500 Call at ₹102 with a lot size of 65. The recommended entry point suggests a maximum profit of ₹7,280 if Nifty closes at or above 24500 on August 11 expiry, while the maximum loss is capped at ₹5,720 if Nifty closes at or below 24300.
The strategy is based on several technical indicators suggesting potential bullish momentum. As reported by Business Standard, FIIs' long-to-short ratio in Index futures is placed at an oversold level of 0.10, indicating a higher possibility of short covering from their side in the coming days. The RSI Oscillator is in rising mode and placed above 60 on the daily chart, while short term trend remains strong as Nifty is positioned above its 5 and 20 day EMA. Additionally, aggressive put writing is observed at 24200-24200 levels among options traders.
The Bull Spread strategy offers a risk-reward ratio of 1:1.27 with a breakeven point at 24388. According to the recommendation, approximately ₹31,500 margin is required for this position. Shah advises that it is advisable to book profit in the strategy when ROI exceeds 20 percent, providing a clear exit strategy for the recommended position.
