Option strategy of the day: Lupin on verge of breakout, put open interest shows robust support

The recent price action in Lupin counter is exhibiting strong bullish signals with strong volumes.

Lupin Ltd's put options show a strong base for the stock at Rs 1,600, below its current trading price of Rs 1,633, indicating that the traders could buy out-of-money call options to capture the upside over the next few sessions.

Lupin Ltd shares Rs 1,600 put options (PE) of the May series have strong open interest of more than 1.3 lakh shares, indicating a robust base for the counter. The recent price action in the counter exhibits strong bullish signals with significant volumes on a daily basis.

Arun Kumar Mantri, Founder of Mantri Finmart, recommends buying LUPIN May series call options with a 1,660 strike to capture this momentum.

Position: BUY LUPIN MAY 1660 STRIKE CE

Entry: Rs 40-43

Target: Rs 62-69

Stop loss: Rs 30

The buy call strategy on Lupin stock for the May series recommended by Mantri is as follows:

STRATEGY

Mantri said that the Bollinger Band (20,2) is facing northward with expected volatility expansion in the coming sessions. Further  the weekly charts are stable, and any decline will present a good buying opportunity in the counter, according to Mantri.

"Lupin is on the verge of breaking out on the daily charts and looks poised to surpass the near-term resistance of Rs 1,630-1,640 in the next 2-3 trading sessions. The moving averages are trading well below the short-term moving averages, indicating strong support in the lower zones," said Mantri.

"The overall open interest in the futures segment also indicates long accumulation from the lower levels, signaling strong buying momentum from the support zones. A breach above 1,650 spot levels may trigger further short covering. Short-term traders may consider the ATM CE of 1,660 of the current month of the May series for a short-term perspective," said Mantri.

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