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B. Venkatesh

THE following strategies are based on Monday's trading in the derivatives and the spot segment on the NSE:

Reliance Industries: The April futures contract closed at 520. The outlook may turn positive if April futures trades above 526.50. The upside target range is 536-540.

Buy April futures after it trades above 526.60. Initiate the position with protective stop at 517. Trail the stop 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 600 units. The open interest position as a percentage of the market-wide limit is about 15 per cent.

Traders can alternatively construct bull call spread. This position can be initiated with long April 520 calls and short April 540 calls. The spread can be set up for a net debit of 7 points. The position could payoff 7 points net if the stock reaches the upside price target in 4-5 trading sessions. Note that capturing premium by selling puts is risky given the downside bias in the market.

Satyam Computer: The April futures contract closed at 386.15. The outlook may turn positive if April futures trades above 388. The upside target range is 396-399.

Buy April futures after it trades above 388. Initiate the position with protective stop at 379. Trail the stop 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 600 units. The open interest position as a percentage of the market-wide limit is about 15 per cent.

Traders can alternatively construct bull call spread. This position can be initiated with long April 390 calls and short April 410 calls. The spread can be set up for a net debit of 5 points. The position could payoff 5 points net if the stock reaches the upside price target in 4-5 trading sessions. Note that volatility capture is not possible, as puts are trading cheap.

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

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