HDFC Bank stock is witnessing a build up of a positive bias, with an increase in June series futures open interest, and a rise in in-the-money options open interest.
HDFC Bank June series futures have seen a substantial rise in open interest, increasing by 4.76 lakh shares, a 75 percent jump, with the premium remaining at just 12 points. The traded volume stands at 6.31 lakh shares, indicating positive interest in the counter.
The open interest in the in-the-money (ITM) June options contracts has risen by 6 lakh, and that in the out-of-the-money (OTM) options has fallen by 32 percent. The at-the-money (ATM) June implied volatility (IV) is 19.51, with a 10 percent change, suggesting keen market participant interest in the price action.
Technical View: HDFC Bank
Technically, HDFC Bank's stock has closed above its 200-day moving average (DMA) at Rs 1,520, suggesting a bullish reversal, with price action heading towards Rs 1,600 and Rs 1,650, which is the gap-down range. While volumes have remained sluggish, the trend is expected to witness bullish momentum once the price sharply penetrates over the 200-DMA. The support for the current bias stays at Rs 1,470, which needs to be adhered to on a closing basis.
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Strategy Recommended:
HDFC Bank Ltd Spread Trade: (Bull Call Spread - June Expiry)
Buy 1500 CE (call option) at Rs 70
Sell 1650 CE at Rs 14
Maximum Potential Profit: Rs 51,150 (173.96%)
Maximum Potential Loss: Rs 31,350 (-106.62%)
Maximum Risk-Reward Ratio: 1:1.63
Breakeven: Rs 1,557
Estimated Margin/Premium: Rs 29,404
The bull call spread is an options trading strategy involving two call options. This strategy is used when a trader expects a moderate rise in the price of an underlying asset. It is executed by buying call options at a specific strike price and selling the same number of calls of the same asset at a higher strike price.
This strategy allows traders to benefit from a rise in HDFC Bank's stock price while limiting the maximum loss, making it a favourable strategy given the current technical and derivative setup.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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