• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Port Info

• Ships in Ports
  
  

Archives

• Yesterday
• Datewise
• Resources

Group Sites

• The Hindu
• Business Line
• The Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

B. Venkatesh

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

SBI: The May futures contract closed at 585.10. The outlook may turn positive if the May contract trades above 608.50. The upside target range is 635-640.

Buy May futures if it trades above 608.50. Initiate the position with protective stop at 580. 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 500 units.

Traders can alternatively construct ratio call spread. This position can be initiated with one long May 600 calls, one short May 640 calls and one short 660 calls. The spread can be set up for net debit of 7-8 points. The position could payoff 15-18 points net if the stock moves to the price target of Rs 635 by May 10.

Should the stock arrive at the target later than May 10, the payoff will be better because the spread is theta-positive. That is, it will benefit from time decay.

Those with short trading horizon can initiate long position in May futures if the contract trades above 585. The upside target range is 593-595. The protective stop should be placed at 580.

M&M: The May futures contract closed at 442.55. The outlook may turn positive if the May contract trades above 445.50. The upside target range is 459-463.

Buy May futures if it trades above 445.50. Initiate the position with protective stop at 428. 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 625 units. 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)

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Sundaram Mutual rejigs load structure — S.M.I.L.E attracts 2.25 pc for exit

Copyright © 2005, 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