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.
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