VK Sharma of HDFC Securities advised constructing a bull spread in Karnataka Bank. According to him, one can buy the 160 call at around Rs 7 and sell the 180 call at around Rs 2.
Sharma told CNBC-TV18, “Karnataka Bank was one of the stronger plays in the banking sector. Open Interest was added more than five percent, price also went up by five percent. You 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 fact is the stock did pretty well.”
“I am suggesting to construct 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 - that is your maximum loss,” Sharma added.
Karnataka Bank surged 6 percent to close at Rs 158.40 on Bombay Stock Exchange on Friday.
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