Financial Daily from THE HINDU group of publications
Wednesday, Mar 02, 2005
Financial Daily from THE HINDU group of publications Wednesday, Mar 02, 2005 |
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Markets
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Derivatives Markets Columns - On the hedge Short-term trend reversal in ITC, Hindalco likely B. Venkatesh
THE following strategies are based on Tuesday's trading in the spot and the derivatives segments on the NSE. These strategies are structured to take advantage of any likely short-term price reversals. Note that the outlook can run counter to the primary trend. The position is, hence, inherently risky and needs to be traded with protective stops. Such strategies are typically valid for two trading sessions from the date of initiation. It may be, however, optimal for traders not to carry their positions overnight because of the high underlying volatility. ITC: Sell March futures after the trades below Rs 1338.65 in the spot market. The downside spot price target is Rs 1306. Initiate the position with spot-market-stop-loss at Rs 1354. The position has to be traded with trailing stops to control the upside risk. The margin on the futures position is approximately 16 per cent of the contract value. The minimum order size is 300 units. No alternative strategies are available, as options on the stock are not actively traded. Hindalco: Buy March futures after the stock trades above Rs 1348 in the spot market. The upside spot price target is Rs 1374. Initiate the position with spot-market-stop-loss at Rs 1333. 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 300 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.)
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