The Derivative Approach
Bank Nifty Bull Spread Strategy
Purchase the Bank Nifty (August 28th) 51000 Call at Rs 355 and sell the 51500 Call at Rs 153 at the same time.
15-Lot Size
The strategy costs Rs 202 (Rs 3030 for each strategy).
Maximum profit of Rs 4470 in case Bank Nifty closes on August 28 at or above Rs 51500
expire.
Break-Even Point: Rs. 51202
Ratio of Risk to Reward 1: 1:48
A rough margin of Rs. 15000 is needed.
Justification
In the Bank Nifty Futures, short covering has resulted in a 3% decline in open interest while the Bank Nifty has increased by 0.59 percent.
Given that the Bank Nifty is above its 5, 11, and 20 day EMA, its short-term trend is bullish.
On the daily chart, momentum indicators and oscillators are increasing and above 50, indicating a bullish trend.
Put writing is observed in Bank NIFTY options between the 51000 and 50500 levels.