ICICI Bank: Chart set up and trading strategy

ICICI BANKNSE

Description

⋅ Jul 2, 2021 5:24 AM

ICICI Bank

Observation

- 20 day EMA is at 636

- 50 day EMA is at 626

Given the set up, one may consider a Bull Put spread strategy

Sell 620 Put option around 9 - 10

Buy 600 Put option around 4 - 4.5

Lot size 1375

The strategy has a yield potential of 12.7% approximately on margin requirement & has an inbuilt loss protection for a fall in price up to 615 till 29 July expiry

Take care & safe trading

Comments

Pyschologicaltrader

⋅ Jul 7, 2021 8:25 AM

Can you please explain how can we get a potentials 12% on a covered call?

indiamarketoutlook

⋅ Jul 7, 2021 9:11 AM

@Pyschologicaltrader,

Margin requirement is reduced while trading in derivatives for taking a hedged futures and options position.

Since this is hedged position, Margin requirement is reduced and hence the yield is approximately around 12%

There may be other factors which may vary the yield potential

- whether you are trading in SPAN Margin or NON SPAN Margin.

Non Span Margin is calculated on individual position and margin requirement is full in this case.

However SPAN margin is calculated based on overall risk of F&O position and hence for hedged positions margins are reduced.

This SPAN Margin implementation has happened since mid 2020.

You can check with your respective Demat Account Relationship Manager for more details.

Trust this would clear all your doubts

Regards,