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B. Venkatesh

THE following strategies are based on Monday's trading in the derivatives segment on the NSE. The strategies are constructed to take advantage of small reversals in futures prices.

The positions may run counter to the primary trend. Protective stops are, hence, important. If futures price gaps down on Tuesday to trade 2-3 points below the recommended entry price, traders should enter the position after the price breaks below the 5-minute low. The position is typically valid for two to three trading days.

However, considering the high underlying volatility, it is best that the position is closed by end trading Tuesday. The targets are accordingly placed near the recommended entry price. For this reason, it may not be optimal to set up options-based positions as alternative strategies.

Tata Motors: Sell May futures if it trades below 449. The downside target range is 445-442. Trade the position with protective stop at 453. The open interest position is about 15 per cent of the contract value. The minimum order size is 825 units.

SBI: Sell May futures if it trades below 634.50. The downside target range is 629-627. Trade the position with protective stop at 639. The open interest position is about 20 per cent of the contract value. The minimum order size is 500 units.

Bajaj Auto: Sell May futures if it trades below 1190. The downside target range is 1180-1172. Initiate the position with protective stop at 1198. The open interest position is about 15 per cent of the contract value. The minimum order size is 200 units.

Nifty: Sell May futures if it trades below 2003. The downside target range is 1998-1994. Initiate the position with protective stop at 2008. Note that the stop should be placed at the day's high at the time the position is initiated, which that price is higher than 2008. The minimum order size is 100 units.

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

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