Option strategy of the day | Cipla on bullish trajectory; use Long call for upside

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Cipla Ltd shares have been making higher highs and higher lows, indicating bullish signals across all major time frames. The pharma sector has been in the limelight for the past few sessions, with Nifty Pharma reaching a 52-week high at 19,771.

According to Arun Kumar Mantri, Founder of Mantri Finmart, "The stock-specific volumes have been encouraging in the latest bullish move, followed by good price action, indicating that the bullish trend may continue in the near term."

Mantri suggests taking a long call option strategy to capture the upside momentum.

Trade Details:
Position: BUY CIPLA JUNE 1520 CE
Entry: Rs 22-23
Target: Rs 34-39
Stop loss: Rs 15
Holding period: 5-6 trading sessions

Technical Data:

Mantri believes that the stock has breached short-term resistances and is poised to test fresh all-time highs in the coming sessions. "The counter looks strong on the weekly time frame and is set to surpass the Rs 1,500 mark decisively in the coming trading sessions. The price is trading above major moving averages and is positioned to surpass the all-time highs," said Mantri.

According to Mantri, the support for the stock is placed at Rs 1,450-1,470 from a short-term perspective, while resistance is at Rs 1,530-1,550 on the higher side.

Derivatives Data:
On the derivatives front, Mantri notes that the stock has already surpassed the second-highest call writing strike of 1480 CE and is set to test 1550+ levels in the short-term period. "The overall OI data suggests that the range for the counter is Rs 1,460-1,550, and given the bullish technical data, we expect the stock to test the upper band of the range. We anticipate the stock will build further long positions once the price decisively crosses Rs 1,500 levels," he said.

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