The Hindu Business Line : Outlook may turn positive for Satyam

Satyam Computer: The stock closed at Rs 397 in the spot market. The outlook may turn positive if the stock trades above Rs 400. In the event, the stock could move to Rs 415.

Buy March futures after the stock moves above Rs 400 in the spot market. Initiate the position with spot-market-stop-loss at Rs 392. The position has to be traded with trailing stops 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 1,200 units.

No alternative strategies are possible, as the target price is not too far away from the current level. It is, therefore, sub-optimal to structure a call spread while a naked position may be risky.

BPCL: Buy March futures if the stock trades above Rs 415 in the spot market. Initiate the position with spot-market-stop-loss at Rs 410. The upside price target is Rs 420. The stock could move to Rs 425. The position has to be traded with trailing stops 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 550 units.

Note that this recommendation is valid for only two trading sessions. If profit is not taken or the position is not stopped, the contract has to be closed at the end of this period. 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.)

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