F&O Radar | Deploy Bull Call Spread in Nifty for potential gains from bullish stance
Nifty index has been making higher highs and higher lows from the last three trading sessions and recently it bottomed out with support of 50 DEMA. Index filled a major gap down zones and scaled higher after a consolidation breakout above 24400 zones.
“Now it (Nifty) has to continue to hold above 24650 zones for an up move towards 24850 then 25000 levels while support is seen at 24600 then 24500 zones,” said Chandan Taparia, Senior VP, Equity Derivatives and Technicals, Broking & Distribution at Motilal Oswal.
India VIX has been gradually drifting lower from the last two weeks. Volatility has corrected from a recent peak of 23 to now below 14 zones which support an overall bullish stance in the market.
On the option front, maximum Call OI is at 25,000 then 25,500 strike while maximum Put OI is at 24,500 then 24,000 strike. Call writing is seen at 24,700 then 25,000 strike while Put writing is seen at 24,700 then 24,600 strike. Option data suggests a broader trading range in between 24,300 to 25,300 zones while an immediate range between 24,400 to 24,900 levels.
“Overall we can play the positive to range bound stance and expect an up move towards 24900-25000 zones,” Taparia said.
Given such a placement, Chandan Taparia suggests deploying a Bull Call Spread options strategy to benefit from the market’s bullish stance.
Bull Call Spread
A bull call spread is an options trading strategy involving two call options. It is typically used when a trader expects a moderate rise in the price of the underlying asset.
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