Scrip – BHEL.
Currently Market Price – Rs. 232.10.
Experimental Action – Buy 240 Call Option (expiry Dec 27 2012) now.
Rationale – is explained in the chart given in this link : BHEL – PATTERN BUY – NOV 30 2012.
Disclaimer and Disclosure – Technicals are gauged and shown using Advanced GET 9.1 EoD Dashboard Edition. I entered this trade around 11:30 am today. Opinions given here are mine only. You are free to build your own view on the stock. I bear no responsibility for any resulting loss, should you choose to enter this trade.
Downside – Entire option premium, about Rs. 5400 per call just now. Your option premium could be considered your stop, if you don’t want to manage your trade actively. If you do, you can set your stop to fractions of the option premium. In fact, you can go about your trade management however which way you wish to do so. Point is, trades need to be managed, either actively or passively.
Upside – roughly > 2 times the option premium (estimated). Estimation of the upside here could be considered an art, roughly based on the chart patterns at hand, coupled with my interpretation of suggestions by the software OptionScope Version 9.1 by Equis international.
Thus, reward : risk for the strategy discussed is rougly > 2 : 1 (estimated).