Financial Daily from THE HINDU group of publications
Saturday, Feb 26, 2005
Financial Daily from THE HINDU group of publications Saturday, Feb 26, 2005 |
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Markets
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Derivatives Markets Columns - On the hedge Short-term reversal likely in Hero Honda, HDFC B. Venkatesh
The following strategies are based on Friday's trading in the spot and the derivatives segments on the NSE. The strategies are structured to take advantage of likely short-term price swings. The positions are, therefore, inherently risky and need to traded with protective stops. The strategy is typically valid for only two trading sessions. If profits are not taken or the position is not stopped, the contracts have to be closed at the end of this period. Hero Honda: Buy March futures after the stock trades above Rs 519.40 in the spot market. Initiate the position with spot-market-stop-loss at Rs 511. The upside price target is Rs 530. 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 400 units. No alternative strategies are available, as options on the stock are not actively traded. HDFC: Buy March futures after the stock trades above Rs 757.55 in the spot market. Initiate the position with spot-market-stop-loss at Rs 750. The upside price target is Rs 769. The position has to be traded with trailing stops. Otherwise, the downside risk will be high, as the contract-multiplier is 600 units. The margin on the futures position is approximately 16 per cent of the contract value. No alternative strategies are 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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