In follow up to my earlier post, I am publishing an idea. Please consult your advisor or broker before executing any order. Please do not take any decision basis my suggestion.
Idea Ref# - Cairn1712
Buy Cairn Jul 2012 Fut at 307.50; and
Buy Cairn Jul 2012 320 put at 16.
Rationale: The stock fell over 6% on 29/06/2012 because of the stake sale by the parent, on a day when most of the indices were up any where between 1.5% and 5%. Moreover the same day post the Indian markets close Crude was up close to 6%. The stock will have to play catch up and also will have to rally on back of crude's gain.
Max loss from the strategy would be Rs. 3.50 per lot. (Lot size: 1000), irrespective of where the stock trades on the date of the expiry(26/07/2012).
Profit is unlimited once the scrip crosses 323.50 on the July Futures Quote, which is just about 5% from here. My gut feeling is the stock can cross 340 before expiry not withstanding any major negative new flow globally.
Stop Loss: Not required.
Regards
SVJ
Disclaimer: I have executed this strategy
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