Intraday and Short Term Trading Calls

Bharat Heavy Electricals Limited (NSE Code – 438, Symbol – Bhel) CMP 2245 could be sold intraday with a stoploss 2258 target 2222, Bhel is also a short term sell, BHEL if it trades below 2280 could be sold for a short term target of 1922, the target could be achieved within 30 - 40 days so one can create the trade through Options also, Bhel is not a liquid stock but if the expectation of Bhel trading at 1922 is achieved the Bhel PA OPTISTK i.e Put Option with contract expiry date of 31 Dec 2009 and strike price of 2130 which has last traded price of 31 could be bought in a range of 33-36 which is a fair price if Bhel is trading in the band 2245 – 2255, The lot size for the contract is 150 so the total investment stands close to 5000/- and if the target is achieved the Put Option would be trading at 210Rs, return on investment would be 600% which is quite good. The risk in disinvesting in Bhel through Put Option is that Bhel being not an active stock in Options trade stoploss could not be executed, if you need to place any.

Reliance Communications (NSE Code – 13187, Symbol RCOM) might breakout in the either direction, if it moves up and above 183 which is quite big a resistance then it’s a buy with a short term target of 238 while if it is not able to clear the resistance of 183 in the coming 4-5 days then one can sell it for short term target of 131 and stoploss above 183, trading in RCOM through the option route is not viable idea as Options in RCOM are considerably costlier while the underlying stock is not showing that much volatility. For example RCOM Call Option with a strike price of 190 and expiry date of 31 Dec 2009 is currently trading at 5.8 Rs which means a Call option which is 10% out of money is demanding 3.5% of the Current Stock Price as a premium, on the other hand put option with an expiry date of 31 Dec 2009 and strike price of 160 Rs is trading at 4.7 Rs which is quite a high premium.

Educomp seems to be breaking down and once it moves up to trade at 805 or consolidates just below 780 in coming 2-3 days, one can sell it for a short term target of 578, Once the Stock trades close to 800 or above 780 in 2-3 days one can initiate a short position in the stock through the Options Channel, One can invest money in the Put Option PA of Educomp, The contract should be of Expiry date 31 Dec 2009 and the strike price should be 720, The fair value would be close to 7 Rs, the lot size is 375, so the investment would stand at close to 2500 Rs, if the target is achieved the Option might trade at 140 Rs i.e 20 times the investment price.