VK Sharma's trading tips for Karnataka Bank & Cipla

In an interview to CNBC-TV18, VK Sharma of HDFC Securities shared his outlook and trading strategy on  Karnataka Bank and Cipla.

For Karnataka Bank, he suggests constructing a bull spread in terms of buying the 160 call at around Rs 7 and selling the 180 call at around Rs 2. Below is the verbatim transcript of his interview to CNBC-TV18 Karnataka Bank Karnataka Bank was one of the stronger plays in the banking sector. Open Interest was added more than five percent and price also went up by five percent. One can say that Karnataka Bank almost led the rally amongst the banking stocks. Although the open interest is quite small at Rs 450 crore as compared to others but the stock did pretty well. Suggest constructing a bull spread here in terms of buying the 160 call at around Rs 7 and selling the 180 call at around Rs 2. This brings the cost of construction of this bull spread to around Rs 5 and that is the maximum loss. Cipla Another stock that we like for next week is Cipla. This is a stock that went down to level of Rs 375. Then buying emerged which added around four percent to the open interest. This buying was on the long side. The price didn't move up more than 0.1 percent but it came to neutral territory. That was good enough on a day in which most of the stocks were down. So, suggest buying the 380 call here at around Rs 8. Keep a stop loss at Rs 5 and hope to sell this at a price of Rs 15 almost earning double of the premium.