Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Futures and Options Strategy in Reliance Communications

1 min read

Stock : Reliance Communications
CMP : 435
Target : Atleast Rs400
Strategy : Long Above 20day EMA and short below 20 Day EMA
 
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.
 


 

Click the above charts to get Enlarged

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.
 
If you are are a Intraday player then it is good to go through the strategy before taking a trade in this counter.
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
 
What Open Interest Tells Us
 

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. "

Best to watch this counter if you want to learn some short selling stuff

 
Regards,
Rajandran R
Author – Marketcalls
Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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