The stock of SBI (₹156) has been under severe pressure in the last six months on bad loan woes. The steep fall has turned the stock’s long-term outlook negative. SBI finds immediate resistance at ₹165 and only a close above ₹211 will change the negative outlook for the stock. A close below ₹146 can trigger a fresh sell-off.

F&O pointers: The SBI March futures shed over 5 lakh shares in open interest on Friday, despite the underlying stock gaining about 3.3 per cent. This implies that traders are not willing to carry over their positions overnight. Option trading suggests that ₹150 could act as a support.

Strategy: Traders can consider long strangle on SBI. This can be initiated by simultaneously buying SBI 175 March call and SBI 140 put. These options closed at a premium of ₹3.55 each. That means, this strategy will cost traders ₹28,400, which would be the maximum loss one suffers.

This can happen if SBI fails to breach the ₹140-₹175 range. Profit can, however, be unlimited if the stock swings aggressively in one direction, that is, up or down. With the Budget round the corner, we expect the stock to witness higher volatility.

A close above ₹182 or below ₹133 will be profitable. Any positive announcement for the banking sector can trigger a rally in the stock.

Hold the position for two weeks after which it can be reviewed.

Trades can consider exiting the position, if the loss mounts to ₹15,000.

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