The Hindu Business Line : Outlook may turn negative for ONGC, positive for Mastek

Sell February futures. The near-month contract trades at 5-point premium to the spot price. Initiate the position with spot-market-stop-loss at Rs 825.

The position has to be traded with trailing stops to control the upside risk. The margin on the futures position is approximately 17 per cent of the contract value. The minimum order size is 300 units.

Traders can construct ratio put spread as alternative strategy. This position can be initiated with one long February 820 puts and two short February 780 puts. The spread can be set up for a net debit of 8 points.

The position would payoff 16-24 points if the stock reaches the downside price target within 7 to 9 days. Note that the payoff will be better if the stock reaches the price target at or near expiration because the spread benefits from time decay.

Mastek: The stock closed at Rs 380 in the spot market. The outlook may turn positive if the stock trades above Rs 386. In the event, the stock could move to Rs 402.

Buy February futures after the stock moves above Rs 386 in the spot market. Initiate the position with spot-market-stop-loss at Rs 374. The position has to be traded with trailing stops. Otherwise, the downside risk will be high, as the contract-multiplier is 1,600 units.

The margin on the futures position is approximately 20 per cent of the contract value. No alternative strategy is available, as options on the stock are not actively traded.

(The opinion expressed in this column is based on technical analysis. There is risk of loss in trading.)

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