Can I buy Dixon June futures now? Please advise – Anilraj R

Dixon Technologies (₹10,150):  The stock hit a record high of ₹10,263 on Monday and has softened a bit. The breakout of the psychological level of ₹10,000 and hitting a new life-time means that the upward momentum is strong. Therefore, the probability of further appreciation is high.

The June futures of Dixon Technologies, after marking a high of ₹10,275 on Monday, is now hovering around ₹10,170. As the outlook of the underlying stock is bullish, the same applies to the futures as well.

But rather than buying futures at the current market price of ₹10,170, businessline suggests waiting for its price to moderate to ₹10,050 for better risk-reward ratio. That is, buy when the June futures of Dixon technologies soften to ₹10,050 and place a stop-loss at ₹9,940. When the contract breaks out of ₹10,280, raise the stop-loss to ₹10,050. Tighten the stop-loss further to ₹10,300 when the price hits ₹10,400. Book profits at ₹10,450.

That said, if Dixon Technologies futures break out of ₹10,280 without seeing a decline, go long with a stop-loss at ₹10,050. Stop-loss adjustments can be made as suggested above.

Note that this is a high risk trade and the margin requirement for Dixon Technologies futures is high i.e., nearly 25 per cent.  Therefore, the margin obligation for initiating this trade will be around ₹2.4 lakhs now.

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