THE following strategies are based on Tuesday's trading in the derivatives segment on the NSE:
OBC: The April futures contract closed at 281.65. Buy the April contract if it trades above 280. The upside target range is 286-289. Place a protective stop at 275 or at the day's low at the time the position is initiated.
This strategy plays on a likely throwback in the futures prices, which have seen several days of decline. The recommendation is valid only for intra-day trading.
The minimum order size is 600 units. The open interest position as a proportion of the market-wide limit is about 40 per cent. Options-based strategies are not optimal because the target level is not far away from the recommended entry price.
Ranbaxy Labs: The April futures contract closed at 941. The outlook may turn positive if the April contract trades above 941.50. The upside target range is 953-961.
Buy April futures after it trades above 941.50. Initiate the position with protective stop at 930. 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 200 units.
The open interest position as a proportion of the market-wide limit is about 15 per cent. 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.)