The ongoing fall in the stock market provides a golden opportunity for long-term investors in the futures of Tata Power Company (Rs.56.5), whose share price currently trades at an eight-year low. The near-term technical outlook is negative.
If the current trend sustains, the stock could even touch Rs.39.50. Only a conclusive close above Rs.73.6 will change the outlook to positive.
F&O pointers:
The Tata Power Company September futures witnessed unwinding of open positions due to the sharp fall in the share price. This is a bearish signal. Option trading data indicates that the stock will encounter strong resistance at Rs.62.50.
Strategy:
Consider buying Tata Power futures as the contract heads lower. This strategy is only for investors with long-term objective (at least two years) and willing to withstand volatility and is not for traders. Stop loss can be kept at Rs.39.
Since it also involves large capital outlay in the form of margin money and any loss has to be made good by regularly paying the mark-to-market difference, only those with deep pockets should consider this strategy. Besides, from November, the lot size will be doubled to 8,000 shares. Initial target is Rs.90 and the next is Rs.114.
Follow-up: We had advised traders to consider short strangle on Cairn India. Traders can hold the position as advised.
No comments:
Post a Comment