Financial Daily from THE HINDU group of publications
Tuesday, Jun 28, 2005
Financial Daily from THE HINDU group of publications Tuesday, Jun 28, 2005 |
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Markets
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Derivatives Markets Columns - On the hedge Outlook may turn positive for Infosys B. Venkatesh
THE following strategies are based on Monday's trading in the derivatives segment on the NSE. Infosys The July futures contract closed at 2327.60. The outlook may turn positive if the contract trades above 2,347. The upside target is 2,410-2,415. Buy July futures after the contract trades above 2,347. Initiate the position with a stop-loss at 2,305. Trail the stop to control the downside risk. The margin on the futures position is approximately 20 per cent of the contract value. The minimum order size is 100 units. Note that option-based strategies are not optimal. With a 30-point interval between strikes, ratio spreads carry a negative gamma. That is, the change in premium for the short calls will be higher than that for the long call for every point of increase in the stock price. The payoff on the bull call spread is also not encouraging. Bank of India The July futures contract closed at 98.80. The outlook may turn positive if the contract trades above 100. The upside target is 105-106. Buy July futures after the contract trades above 100. Initiate the position with a stop-loss at 97.50. Trail the stop to control the downside risk. The margin on the futures position is approximately 20 per cent of the contract value. The minimum order size is 1,900 units. Alternative strategies are not available, as options on the stock are not actively traded. HDFC Sell June futures if it trades below 593. The downside target is 589-587. Initiate the position with a protective stop at 597. The minimum order size is 300 units. The open interest position is about 10 per cent of the market-wide limit. Note that this strategy is valid for only intra-day trading. ACC Buy June futures if it trades above 371. The upside target is 373-374. Initiate the position with a protective stop at 368. The minimum order size is 750 units. The open interest position is about 20 per cent of the market-wide limit. This strategy is valid for only intra-day trading. (The opinion expressed in this column is based on technical analysis. There is risk of loss in trading)
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