Trading Opportunity with Reliance RLP merger

Reliance RLP merger

Now after this news of Reliance RPL merger , the chances that one can expect a good bounce in these two shares is quite high , especially RPL .

Both the stocks are almost near there monthly support points and we can expect them to bounce back on monday with gap up is quite high and its possible that they break out of there resistance levels , that would be a good indication to go long these stocks .

Lets see both stocks one by one with there 3 months daily chart . click charts to enlarge .
Reliance




If you see the charts there is this upward trend line with support and the stock has actually bounced back a bit from that support point , Though it was in itself a buy signal , now it becomes a more stronger buy signal after this news. So What can be the strategy for this stock to trade .

Strategy :

wait for 15 min on monday , let dust settle and if stock moves up , then go long with SL at 1260 (support line) , better if you can wait for a dip and then buy it .

Dont just jump to go long soon after market opens up , wait for it to settle down , it may happen that it opens too up and then moves down again . Better to wait for 10-15 min first . this is the thing you should always do .


RPL



You can see the support line at Rs 76 , where this stock currently is closed at . After this news , if it opens higher on monday , which has higher chances of happening , go long after 15 min on monday , better to wait for a small dip and then go long . You can also see lower than average volumes for last month when stock was nearing the support , which is also in favour of going long .

Strategy

If stock opens at same levels of 76-80 , go long with SL of Rs 70 (earlier support) .
If stocks open above Rs 80 , you can use SL of Rs 76 (near term support) .

You should not prematurely exit the trade with small profits , better to have 2 targets and book partial profits at first target and hold the another one .

How can we trade this with options (only for people who understand options and have experiance) ?

Reliance and RPL :

Its only advisable for risky traders ,. You can buy at the money call, If stocks do not move in 2 day , get out . If they start moving up , then hold it with SL of buy price and then keep moving your SL after every 10% profit . It depends on your risk profile .

If stocks do not move then there can be chances of big loss , so better to very disciplined with your SL . and use it once trade is not in your favour .

What is the learning ?

The stocks were already near there support levels , and with news like this it becomes a great opportunity to go long on these scrips . But dont forget to see overall market trend and direction , Overall long term market direction is Down and its expected soon , so with some decent profits , get out and dont over carry the position because of Greed .