Trading opportunity

4 ม.ค. 2018

Trading opportunity:

JSW STEEL
CMP 277.15
Target : 297 plus
Stop : 265 (below the low of previous candle)
Rationale :
W pattern breakout.
Target : Length of the pole of W X 0.5 + breakout level = 297 plus.
Trading Strategy:
1) Aggressive traders : Jan Futures - Lot size 3000; Profit potential around rs 20X3000 = Rs 60,000 per lot. Risk Rs 12 X 3000 = Rs 36,000

2) Conservative traders : Options - Buy 275 strike Call at Rs 10-11 with an outflow of around Rs 11 X 3000 = Rs 33,000. Probable call level at the target of 297 is around ((297-275) * call delta ) X lot size = 22 X 0.5 X 3000 = Rs 33,000. Risk is the upfront premium paid which is Rs 33,000 . Underlying stop of 265 gives a call price of approx Rs 6 per lot, which gives a risk of Rs (11-6) X 3000 = Rs 15,000.

3) Ultra conservative traders : Bull call spread - Buy 275 strike call at Rs 10-11 and Sell 300 call at Rs 3. Net outflow : Rs 8 X 3000 = Rs 20,000. OTM call strike selected base on the highest addition of OI; so ideally should be a strong resistance level. Max possible profit = 300-275-3 = 22 , ie 22X3000 = Rs 66,000; Max possible loss = Rs 8 X 3000 = Rs 24,000. Profits only if the underlying expires in the range of 275 to 300 (minus premiums paid).

4) Super ultra conservative traders : Buy stock at cmp with a stop of 265 and trail the price with open target.