F&O Strategy: Nandish Shah recommends a Bull Spread on Infy for Aug expiry

The technical analyst from HDFC Securities recommends buying Infosys 1520 Call and simultaneously selling 1580 Call of the August expiry.

Derivative Strategy

BULL SPREAD Strategy on Infosys

Buy INFY (25-August Expiry) 1520 CALL at Rs 41.50 & simultaneously sell 1580 CALL at Rs 18.50

Lot Size 300

Cost of the strategy Rs 23 (Rs 6,900 per strategy)

Maximum profit Rs 11,100 If Infy closes at or above Rs 1,580 on 25 August expiry.

Breakeven Point Rs 1,543

Approx margin required Rs 23,000

Rationale:

• We have seen long build up in the Infy futures on Thursday, where we have seen 22 per cent addition (Prov) in Open Interest with price rising by 3 per cent.
   
• Short term trend of the stock turned positive and stock is trading above its 5 and 20 day EMA.
   
• RSI (11) Oscillators is in rising mode and placed above 50 on the daily chart, Indicating strength in the current uptrend.
   
• Nifty IT index has broken out on the daily chart, suggesting more upside in the coming days.

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