State Bank of India (Rs 2,160): Thanks to the recent surge in the share price, the stock of SBI was able to arrest its bearish trend. However, it may face resistance going forward as the recovery was too sharp. SBI faces key resistance at Rs 2,264 while the support is placed at Rs 1,960. A close below the support can even drag the stock towards Rs 1,805. On the other hand, continuation of the current trend can push the stock towards Rs 2,568. We expect the stock to correct.

  F&O pointers: Fresh shorts were initiated on SBI on Friday. Option trading indicates that SBI could move in Rs 1,900-2,200 range as lower strike puts and higher strike calls witnessed heavy accumulation of open interests.

  Strategy: Traders can short SBI with a stop-loss at Rs 2,264 (spot price on a closing day basis). Market lot is 125 shares a contract. Alternatively, traders can sell 2,200 call, which closed at Rs 57 on Friday. While maximum profit in the strategy is the premium collected, loss could be unlimited if SBI moves up sharply above Rs 2,200. This strategy, therefore, is for traders with a high-risk appetite only. SBI is coming out with its quarterly numbers on February 13.

Suzlon (Rs 31): After hitting life-time low in January, Suzlon Energy has recovered sharply. However, it now faces strong resistance. It finds immediate resistance at Rs 33.5 and a key one at Rs 36.4. A close above the latter level would trigger a fresh rally in the stock, which may take it to Rs 45. On the other hand, a close below Rs 30 (spot price) will trigger a fresh sell-off. In that event, Suzlon can reach Rs 24.4 though in between it faces resistance at Rs 26.3.

  F&O pointers: Suzlon saw heavy unwinding of open interest positions on Friday, along with a fall in share price. This indicates that traders are not willing to rollover their positions. Option trading indicates a neutral view as both calls and puts added open interest. Trading in call option indicates that Suzlon would face strong resistance at Rs 32.5 and Rs 35 levels. Puts were not that active.

  Strategy: Traders can short Suzlon with a stop-loss at Rs 33.5 for an initial target of Rs 26. Stop-loss can be shifted to Rs 30, if it dips below that level. Risk-averse traders could wait till it closes below Rs 30.

 Traders could also consider selling (writing) 32.5 call, which closed on Friday at Rs 1.35. This strategy for traders who can afford to take a risk, as loss could be unlimited if Suzlon reverses direction and surges sharply. The maximum profit could be the premium collected. Market lot is 8,000 shares/ contract.

Follow-up: Last week we had recommended a long on Alok Industries with a stop-loss at Rs 20. As expected, the stock moved in positive zone. Traders can now consider holding the position with a revised stop-loss at Rs 22.4. We had also advised traders to write 20 put in the counter. Traders can consider closing out the position, as the put closed at 15 paise, netting neat profits. We had also recommended a long on Biocon. Traders can hold the position with a revised stop-loss at Rs 280 (spot price on a closing day basis).

  Feedback or queries (on positions) may be sent to  f&o@thehindu.co.in

Related Topics
comment COMMENT NOW