The Hindu Business Line : ACC: Outlook negative, short March futures

ACC: The stock closed at Rs 252 in the spot market. On the downside, the stock could move to Rs 247 and then to Rs 231. The outlook could turn positive if the stock closes above Rs 266. In the event, it could drift to Rs 274 and then to Rs 282.

Consider shorting March futures if the stock trades below Monday's close. Initiate the position with stop-loss at Rs 254. The short futures position has to be traded with trailing stop-loss if the contract is kept open beyond the first support level of Rs 247. The margin on the short futures position is approximately 30 per cent of the contract value.

Traders who prefer to initiate long put position should note that the farther-month options are not traded yet. The near-month 250 puts currently trade for 3.5 points. Those who have risk capital of Rs 5,250 can consider buying the February 250 puts. Note that the price levels mentioned are valid till March 1, 2004. The risk in initiating near-month puts is that the stock has to trade below Rs 246 for the option to be profitable before its expiry on February 26. The minimum order size is 1,500 units.

BPCL: The stock closed at Rs 445 in the spot market. The stock could decline to Rs 437 and then to Rs 419. The outlook could turn positive if the stock closes above Rs 471. In the event, the stock could move to Rs 487 and then to Rs 500.

Consider shorting the March futures on the stock. The farther-month contract trades at 3-point premium to the spot price. Initiate the position with stop-loss at Rs 449. The position has to be traded with trailing stop-loss if it is kept open beyond the stock's first support level of 437. Note that the short futures position cannot be hedged with calls because the options on the stock are not actively traded. The price levels are valid till March 1, 2004. The minimum order size is 1,100.

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