The Hindu Business Line : F&O query corner

Your position ended at Rs 5.75 on moorat day trading. It did, however, provide you an excellent profit opportunity, as RCom 230 put touched Rs 14.25 during intra-week trading.

The downtrend would persist on Reliance Communications, as long as it stays below Rs 275. It has critical support at Rs 220. A fall below Rs 220 has the potential to weaken the stock to Rs 150 though 182-185 could act as a minor support level in-between.

F&O pointers

The RCom futures closed at Rs 239.15 against the spot close of Rs 239.25. But for moorat trading, the stock has seen steady accumulation in open position, particularly on the short side. Among the options, 230 and 260 calls and 230 put shed open position, while trading in other options does not provide much insight. However, shedding of open position indicates that Rcom could move in Rs 230-260 range.

Strategy

In case you have not booked profits, you can hold on to your position. We expect the stock to touch the support at Rs 220, which would ensure a minimum profit of Rs 5/contract. If spot price dips below 220, shift the stop-loss to 220 (on a closing day basis) to protect your profits. Cut your put position if the premium of your position halves to Rs 2.5.

I have sold (short) Sesa Goa Oct futures at Rs 294. Can I expect the share to fall below my purchase? I thought it would not fly over 3-4 per cent. But, by closing time it zoomed and crossed Rs 300 and finally closed at Rs 298.25. Please advice. – Mr Kuppuraj, Tiruchi

After you entered the counter, it spurted closed to 18 per cent. We hope you closed your position with minimum losses, as you had expected only a 2-3 per cent rise. Technically speaking, the stock entered uncharted territory and it is very difficult to predict its movement. Even F&O trading pattern gives little clue about its future price movement. Sesa Goa Oct futures saw accumulation of short positions as futures price trail the spot price. If short unwinding happens the stock could rise further or may stay firm here. Higher accumulation at 360 and 370 calls suggests limited upside from current level.

K.S. Badri Narayanan

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