Financial Daily from THE HINDU group of publications
Wednesday, Nov 24, 2004
Financial Daily from THE HINDU group of publications Wednesday, Nov 24, 2004 |
|
|
|
|
|
Markets
-
Derivatives Markets Columns - On the hedge HPCL: Outlook positive, buy December futures B. Venkatesh
THE following strategies are based on Tuesday's trading in the spot and the derivatives segment on the NSE: HPCL: The stock closed at Rs 342 in the spot market. The outlook appears positive. The upside price target is Rs 351. The target may be upgraded to Rs 365. Buy December futures. The farther-month contract trades at 2-point premium to the spot price. Initiate the position with spot-market-stop-loss at Rs 336. The position has to be traded with trailing stops to control the downside risk. The margin on the futures position is approximately 17 per cent of the contract value. The minimum order size is 650 units. Traders can construct synthetic long as alternative strategy. This position can be initiated with long December 340 calls and short December 340 puts. The synthetic short can be set up for net debit of 3 to 4 points. The position will generate 13 points if the stock reaches the upside price target within 5 trading sessions. Note that the position suffers from high downside risk just as a short underlying. It may be optimal to close the position if the stock moves below Rs 336. In the event, the position may suffer approximately 7 points loss. i-flex Solution: The stock closed at Rs 536 in the spot market. The stock appears poised for a short-term price reversal. The upside price target is Rs 556. Buy December futures. The farther-month contract trades at 4-point premium to the spot price. Initiate the position with spot-market-stop-loss at Rs 528. The position has to be traded with protective stops. Otherwise, the downside risk will be high, as the longer-horizon trend remains negative. The margin on the futures position is approximately 17 per cent of the contract value. The minimum order size is 300 units. No alternative strategies are available, as options on the stock are not actively traded. (Note: The opinion expressed in this column is based on technical analysis. There is risk of loss in trading.)
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
|