Financial Daily from THE HINDU group of publications
Thursday, Mar 18, 2004
Financial Daily from THE HINDU group of publications Thursday, Mar 18, 2004 |
||
|
|
||
|
Markets
-
Derivatives Markets Columns - On the hedge ACC: Outlook positive, buy March futures B. Venkatesh
THE following strategies are based on Wednesday's trading in the spot and the derivatives segment on the NSE: ACC: The stock closed at Rs 248 in the spot market. The outlook appears positive. The upside price target is Rs 266. Consider buying the March 245 calls, as they are cheaper in terms of implied volatility. The options are trading rich. This exposes the position to high risk due to decline in volatility of the underlying. The position will generate profits even if the stock reaches the upside price target on option expiration. The reason is that the price target is far above the strike plus the option premium. The maximum loss is the option premium of 8.5 points. The minimum order size is 1,500 units. Traders who prefer to buy futures would do well to initiate the position after the stock moves above Rs 256. In the event, the stock would speed to Rs 266. The position has to be initiated with stop-loss at Rs 250. The open interest position as a percentage of the market-wide limit is above 45 per cent. Bank of Baroda: The stock closed at Rs 218 in the spot market. The outlook appears positive. The upside price target is Rs 230. Consider buying the April futures on the stock. The farther-month contract trades on par with the spot price. The position has to be initiated with spot-market-stop-loss at Rs 210. This exposes the position to 8-point downside risk. The position has to be traded with trailing stop-loss. Otherwise, the downside risk will be high because the contract-multiplier is 1,400 units. The margin on the long futures position is approximately 30 per cent of the contract value. The open interest position as a percentage of the market-wide limit is just over 15 per cent. Initiating long call position on the stock may not be optimal because options on the stock are not actively traded.
More Stories on : Derivatives Markets | On the hedge
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2004, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|