Bull Spread Strategy on NIFTY by HDFC Securities

Buy NIFTY (24-Feb Expiry) 25400 PUT at Rs 143 & simultaneously sell 25200 PUT at Rs 75

• Lot Size 65
• Maximum Loss Rs 4420 If NIFTY closes at or above 25400 on 24 Feb expiry.
• Maximum profit Rs 8580 If NIFTY closes at or below 25200 on 24 January expiry.
• Breakeven Point Rs 25332
• Risk Reward Ratio 1: 1.94
• Approx margin required Rs 34000

Rationale

• Short build up is seen in the Nifty Futures, where Open interest rose by 9% along with price fall of 1.6%.
• Short term trend for the Nifty turned weak as it closed below its 5,11 and 20 day EMA.
• Nifty open interest put call ratio fell sharply to 0.71 levels from 1.22 levels on the back of call writing at 25500-25800 levels.
• RSI Oscillator is in falling mode and placed below 50, suggesting strength in the downtrend.

Note : It is advisable to book profit in the strategy when ROI exceeds 20%.