The long-term outlook for Coal India (Rs 204.5) remains negative. The long term outlook will change to positive only if the stock breaks above Rs 277. The stock finds immediate resistance at the Rs 220 and Rs 236 levels. It finds strong support at Rs 187; a close below that level could trigger a fresh slide in the stock. We expect the stock to move in a range of Rs 190-220, before taking a clear direction.

F&O pointers: The Coal India January futures shed open interest positions on Friday, despite the stock posting handsome gains. Options, both call and put, saw open interest declining. This indicates that traders are not willing to carry over their positions, expecting a narrow range.

Strategy: We advise a short strangle strategy on Coal India. This can be initiated by selling the 220-call and 190-put. These options closed with a premium of Rs 1.15 and Rs 0.95 respectively.

Maximum profit can be realised if the stock moves in the Rs 190-220 range.

However,one could suffer deep losses if the stock moves violently in any single direction - either up or down. A move above Rs 222.10 or below Rs 187.90 would start hurting the position. Hold the position till near expiry of current months.

Follow-up: The Bajaj Auto stock moved on expected lines and provided profit opportunities, though it missed our target price. As the stock bounced back violently, anyone still holding can exit.

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