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B. Venkatesh

THE following strategies are based on Thursday's trading in the derivatives segment on the NSE:

Tata Motors: The April futures contract closed at 434.30. The outlook may turn negative if the April contract trades below 423.30. The downside target range is 403-400.

Sell April futures after it trades below 423.30. Initiate the position with protective stop at 437. Trail the stop 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 825 units. The open interest position is about 15 per cent of the market-wide limit.

Traders can alternatively construct bear put spread. This position can be initiated with long April 430 puts and short April 400 puts. The spread can be set up for a net debit of 5 points. The position could pay-off 20 points net if the stock reaches the price target of Rs 405.

Maruti Udyog: The April futures contract closed at 431.50. The outlook may turn negative if the April contract trades below 417.35. The downside target is 395.

Sell April futures after it trades below 417.35. Initiate the position with protective stop at 436. Trail the stop to control the upside risk. The margin on the futures position is approximately 30 per cent of the contract value. The minimum order size is 400 units.

Traders can alternatively construct ratio put spread. This position can be initiated with one long April 430 puts, one short April 420 puts and one short April 410 puts. The spread can be set up for a net debit of not more than 3 points. Note that both the short puts are inside the target price level. Therefore, the spread should not be allowed to run for the target price. Traders should close the spread if the stock moves below Rs 410 in the spot market. The payoff will then be around 8-10 points.

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

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