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

Axis Bank has been in a broad range since November 23 and has been fluctuating between Rs 1,021.60 mark on the lower side, and Rs 1,150.95 on the upper side. The stock managed to breach the resistance one to create a new all-time high of Rs 1,182.90 on April 30.

In the entire month of May so far, the stock has closed below its resistance level.

“AXISBANK showcases promising technical indicators, marked by a bullish candle formation on its daily chart from the support levels of 1106 near to its 20-Day EMA levels currently trading at 1132. The stock has also formed a bullish flag and pole pattern on daily charts indicating strength. The stock faces a minor resistance at 1150 levels. A breakthrough above this barrier could propel it towards the Fib Extension target of 1225, said Deven Mehata, analyst at Choice Broking.

(Source: Choice Broking)

Highest outstanding OI for the series

Highest Call OI

The highest call OI for Axis Bank stands at the strike price of Rs 1,150 (2,513), with a -140 change in the OI, followed by Rs 1,180 (2,019).

Highest Put OI

The highest put OI for Axis Bank stands at the strike price of Rs 1,100 (2,239), followed by Rs 1,050 (1,689).

The stock has maintained its position above key moving averages and an RSI of 58.24 underscores its positive momentum. Investors may consider initiating positions in AXISBANK, leveraging option strategies to capitalize on potential upside movements, Mehata added.

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

Bull Call Spread

Bull Call Spread strategy is best implemented when the outlook on the stock is not very aggressive. It is a two-leg spread strategy typically involving an ATM and an OTM option. In this strategy there is always a ‘net debit’ for the trader.

(Prices as of 15th May)

Below is the payoff chart for the above strategy:

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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