Bull Call Spread strategy on Karnataka Bank

Bull call spread helps you take a directional call and it has lesser cost as compare to buying a naked call since you get some cash flow by selling a higher strike call.

In the below table, we are buying a 105 strike call for KTK Bank and selling 112.5 strike call. View we have taken is that stock price will go up which will increase the value of 105 while the increase in the value of 112.5 will be lower thus increasing our profit.

In the cost column, we can further analyze that the strategy is cheaper when the stock price is away from the strike price however we can't wait for that to happen and get into the order as soon as we have the confidence about the direction.

Symbol	Date	Expiry	Option	Strike Price	Strike Price	LTP – 105	LTP – 112.5	LTP – Stock	Cost
KTKBANK	30-Nov-2018	27-Dec-2018	CE	105	112.5	3.9	1.55	103.55	2.35
KTKBANK	03-Dec-2018	27-Dec-2018	CE	105	112.5	4.15	1.75	104.85	2.4
KTKBANK	04-Dec-2018	27-Dec-2018	CE	105	112.5	3.55	1.25	103.7	2.3
KTKBANK	05-Dec-2018	27-Dec-2018	CE	105	112.5	2.6	0.9	102.15	1.7
KTKBANK	06-Dec-2018	27-Dec-2018	CE	105	112.5	2.7	0.95	103	1.75
KTKBANK	07-Dec-2018	27-Dec-2018	CE	105	112.5	3.2	0.85	103.1	2.35
KTKBANK	10-Dec-2018	27-Dec-2018	CE	105	112.5	2.2	0.5	101.2	1.7
KTKBANK	11-Dec-2018	27-Dec-2018	CE	105	112.5	2.55	0.5	103.35	2.05
KTKBANK	12-Dec-2018	27-Dec-2018	CE	105	112.5	4.85	1.35	107.2	3.5
KTKBANK	13-Dec-2018	27-Dec-2018	CE	105	112.5	5.1	1.4	108.05	3.7
KTKBANK	14-Dec-2018	27-Dec-2018	CE	105	112.5	5.2	1.3	108.55	3.9

Having a put call strategy would have yielded almost similar result however liquidity of the options is a concern for KTK Bank.

Symbol	Date	Expiry	Option type	Strike Price	Strike Price	LTP-105	LTP-112.5	Underlying Value	Inflow
KTKBANK	30-Nov-2018	27-Dec-2018	PE	105	112.5	4.65	9.25	103.55	4.6
KTKBANK	03-Dec-2018	27-Dec-2018	PE	105	112.5	3.7	8.1	104.85	4.4
KTKBANK	04-Dec-2018	27-Dec-2018	PE	105	112.5	4.4	9	103.7	4.6
KTKBANK	05-Dec-2018	27-Dec-2018	PE	105	112.5	4.4	10.3	102.15	5.9
KTKBANK	06-Dec-2018	27-Dec-2018	PE	105	112.5	4.75	9.5	103	4.75
KTKBANK	07-Dec-2018	27-Dec-2018	PE	105	112.5	4.5	9.35	103.1	4.85
KTKBANK	10-Dec-2018	27-Dec-2018	PE	105	112.5	6.65	11.1	101.2	4.45
KTKBANK	11-Dec-2018	27-Dec-2018	PE	105	112.5	3.75	9.1	103.35	5.35
KTKBANK	12-Dec-2018	27-Dec-2018	PE	105	112.5	1.7	6.1	107.2	4.4
KTKBANK	13-Dec-2018	27-Dec-2018	PE	105	112.5	1.35	5.4	108.05	4.05
KTKBANK	14-Dec-2018	27-Dec-2018	PE	105	112.5	1.1	4.85	108.55	3.75