Futures and Options Strategy in Reliance Communications

 

Reliance Communications is a nice counter to play in futures and options. One of the easy strategy to play in this

stock is to Go Long  Above 20day EMA and short below 20 Day EMA. Which works well if you applies to the 6 month chart of RCOM.

 

In the 6 month chart of RCOM it is clearly visible that short the stock if the candle exactly falls below 20 day EMA and go long if the candle is exactly above 20 day EMA.

 

In case of strong downward momentum this stock often pullbacks upto 20 day EMA. Thrice in this month alone(as shown in Red arrows in the charts)

and offering nice position to short the stock for valubale returns. So keep your stop loss just above the 20 Day EMA which comes near to Rs450. Target should be extended atleast 400. The only negative factor to be considered is

the stock is currently in oversold condition as per figures from Slow Stocastic Indicators.

 

Right now even if the stocks opens near 440- 445 it is good to short near the days high wihout any fear. Also the

counter is looking bearish due to the MTN call off and RIL- RCOM abitration process

 

 

Instrument	Symbol	Date	Expiry	Close	No. of contracts	Turnover in lacs	Open Int	Change in OI
FUTSTK	RCOM	1-Jul-08	31-Jul-08	396.55	35278	51445.67	14575400	175000
FUTSTK	RCOM	2-Jul-08	31-Jul-08	419.25	33991	48919.65	15659700	1084300
FUTSTK	RCOM	3-Jul-08	31-Jul-08	389.8	20338	28136.76	15124900	-534800
FUTSTK	RCOM	4-Jul-08	31-Jul-08	437	28930	42511.84	14255150	-869750
FUTSTK	RCOM	7-Jul-08	31-Jul-08	420.5	25027	38336.79	14741300	486150
FUTSTK	RCOM	8-Jul-08	31-Jul-08	416.1	19044	27774.42	15180550	439250
FUTSTK	RCOM	9-Jul-08	31-Jul-08	443.25	26536	41183.26	15338400	157850
FUTSTK	RCOM	10-Jul-08	31-Jul-08	447.25	15395	23943.23	15201900	-136500
FUTSTK	RCOM	11-Jul-08	31-Jul-08	438.75	17010	26175.22	14721000	-480900
FUTSTK	RCOM	14-Jul-08	31-Jul-08	440.25	16576	25705.37	15130150	409150
FUTSTK	RCOM	15-Jul-08	31-Jul-08	406.4	16704	24276.69	15122800	-7350
FUTSTK	RCOM	16-Jul-08	31-Jul-08	401.3	19878	28100.79	15004850	-117950
FUTSTK	RCOM	17-Jul-08	31-Jul-08	419.5	17285	24983.22	14563500	-441350
FUTSTK	RCOM	18-Jul-08	31-Jul-08	436.95	19226	28834.86	14023450	-540050

 

Bearishness is observed from the open interest figures. As per General rules of Volume and Open Interest "Rising prices and a decline in open interest at a rate greater than the seasonal norm is bearish. This market condition develops because short covering and not fundamental demand is fueling the rising price trend. In these circumstances money is flowing out of the market. Consequently, when the short covering has run its course, prices will decline. "

 

Regards,

Rajandran R

Author – Marketcalls