The stock of IRCTC (₹644.15) is ruling at a crucial level. The stock has been moving in a narrow range between ₹770 and ₹600 for quite some time. We expect the stock will continue to move in the range for some more time. It finds a resistance at ₹664 and the next one at ₹677. Only a close above ₹715 will change the medium-term outlook positive for IRCTC. It finds an immediate support at ₹627 and the major one at ₹598.
F&O pointers: IRCTC has witnessed accumulation of open positions quite steadily. The February futures, at ₹641.40, is at discount to the spot price of ₹644.15 (partly due to dividend announcement and squaring up of long positions). Option trading indicates that IRCTC can move in a range of ₹600-700.
Strategy: We advise traders to consider a short strangle, which is quite risky, as the profit is limited to the premium received while the loss could be high. So, this strategy is strictly for traders who understand risk involved in case of wild swings and would be able to meet margin commitments.
Traders could consider selling 700-call and 580-put. These options closed with a premium of ₹1.65 and ₹1.15. As the market lot is 875, this will entail an inflow of ₹2,450, which would be the maximum profit one can earn, and that will happen if the stock stays in the ₹580-700 range on expiry. A close above ₹702.80 or below ₹577.20 will hurt the portion. Risk-averse traders can stay from this strategy.
Follow-up: NTPC moved in a narrow range last week with negative bias. Traders can hold the position with mentioned stop-loss.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading