Options Radar: Deploy Bull Call Spread on Axis Bank as outlook not very aggressive

May 16, 2024 | blog

Axis Bank has been in a broad vary since November 23 and has been fluctuating between Rs 1,021.60 mark on the decrease aspect, and Rs 1,150.95 on the higher aspect. The inventory managed to breach the resistance one to create a brand new all-time excessive of Rs 1,182.90 on April 30.

In the whole month of May to date, the inventory has closed under its resistance stage.

“AXISBANK showcases promising technical indicators, marked by a bullish candle formation on its every day chart from the help ranges of 1106 close to to its 20-Day EMA ranges at the moment buying and selling at 1132. The inventory has additionally fashioned a bullish flag and pole sample on every day charts indicating power. The inventory faces a minor resistance at 1150 ranges. A breakthrough above this barrier might propel it in the direction of the Fib Extension goal of 1225, stated Deven Mehata, analyst at Choice Broking.

(Source: Choice Broking)

Highest excellent OI for the sequence

Highest Call OI

The highest name OI for Axis Bank stands on the strike worth of Rs 1,150 (2,513), with a -140 change within the OI, adopted by Rs 1,180 (2,019).

Highest Put OI

The highest put OI for Axis Bank stands on the strike worth of Rs 1,100 (2,239), adopted by Rs 1,050 (1,689).

The inventory has maintained its place above key shifting averages and an RSI of 58.24 underscores its constructive momentum. Investors might contemplate initiating positions in AXISBANK, leveraging choice methods to capitalize on potential upside actions, Mehata added.

Based on the above evaluation and observations, Deven Mehata suggests deploying a Bull Call Spread technique to catch the potential bullish momentum.

Bull Call Spread

Bull Call Spread technique is greatest applied when the outlook on the inventory shouldn’t be very aggressive. It is a two-leg unfold technique usually involving an ATM and an OTM choice. In this technique there’s all the time a ‘net debit’ for the dealer.

(Prices as of fifteenth May)

Below is the payoff chart for the above technique:

(Disclaimer: Recommendations, strategies, views and opinions given by the specialists are their very own. These don’t symbolize the views of The Economic Times)

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