Option strategy of the day | Volume breakout in IRCTC stock; use long call for gains

Mantri notes that IRCTC stock is in a 'higher highs and higher lows' cycle and is on the verge of breaking out above the recent resistance levels on the daily charts. The recent price performance indicates strength and is expected to continue the positive momentum in the coming days.

"The stock is trading comfortably above its 21, 50, 100, and 200-day exponential moving averages (DEMA) on both daily and weekly charts, indicating strength. Leading indicators such as Parabolic SAR and MACD also suggest a positive trend for the near term," he said.

Derivatives Data

Option chain analysis for the June series shows that the stock is above the strong support zone at Rs 1,000, where heavy put writers are positioned with 16.12 lakh shares outstanding in the Rs 1,000 strike put option. "The recent price action, accompanied by good volumes in the derivatives segment, indicates underlying strength expected to persist in the short-term trade," said Mantri.

"The stock has also added significant open interest in the last session, indicating that the upward move is likely to continue in the near term, with the price expected to test Rs 1,090-1,095 levels," he added.

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