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B. Venkatesh

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

Infosys: The July futures closed at 2222. The outlook may turn positive if the contract trades above 2264. The upside target is 2365-2370.

Buy July futures after the contract trades above 2264. Initiate the position with stop-loss at 2210. Trail the stop to control the downside risk. The margin on the futures position is approximately 16 per cent of the contract value. The minimum order size is 100 units.

Traders can alternatively construct a bull call spread. This can be initiated with long July 2280 calls and short July 2370 calls. The spread can be set up for a net debit of 20-24 points. The position could payoff 35-40 points net if the upside target is reached within 5 days.

Note that the short call has a higher gamma, which means that the premium for the short call will change faster than that of the long call for every point increase in the stock price. The upshot is that the payoff will be lower if the upside target is reached faster.

IOC: The July futures closed at 404.90. The outlook may turn positive if the contract trades above 407. The upside target is 420-422.

Buy July futures after the contract trades above 407. Initiate the position with stop-loss at 400. Trail the stop to control the downside risk. The margin on the futures position is approximately 16 per cent of the contract value. The minimum order size is 600 units. Alternative strategies are not available, as options on the stock are not actively traded.

Intra-day position: Hero Honda appears an optimal pick for intra-day trade. Sell the July futures contract if it trades below 606. The downside target range is 602-600. Place the protective stop at 610. The minimum order size is 400 units.

The open interest position is about 5 per cent of the market-wide limit.

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

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