F&O Strategy: Here's why Nandish Shah recommends a Bull Spread on Axis Bank

The technical analyst from HDFC Securities recommends buying Axis Bank 640 Call and simultaneously selling 650 Call for the July expiry.

Bull Spread strategy on Axis Bank

Buy Axis Bank (28-July Expiry) 640 Call at Rs 20 & simultaneously sell 670 Call at Rs 8.80

Lot Size 1,200

Cost of the strategy Rs 11.2 (Rs 13,440 per strategy)

Maximum profit Rs 22,560 if Axis bank closes at or above Rs 670 on 28 July expiry.

Breakeven Point Rs 651.2

Rationales:

• We have seen long build up in the Axis bank futures where we have seen 20 per cent addition in Open Interest (Prov) with price rising by 2 per cent.
   
• Stock price has formed multiple bottoms around Rs 622 levels.
   
• On 23-June, stock price formed Doji candle stick pattern, after prolong downtrend, Indicating probable trend reversal
   
• RSI Oscillators has been rising after forming positive divergence on the daily chart.

Disclaimer: Nandish Shah is Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.