I’m holding March expiry 1300-strike call on ICICI Bank bought for ₹18. Should I hold or exit? – Sathish
ICICI Bank (₹1,232.95): The stock has been falling over the past two weeks. It fell off the 50-day moving average at ₹1,280. But it is now trading near the support at ₹1,225. If the bears can drag the stock below this, it can trigger a fall to ₹1,200. Post this move, there might be a recovery.
On the other hand, if the stock can rebound from the support at ₹1,225, it can rise to ₹1,280 in the near-term. A breakout of this can lift the contract to ₹1,315.
Given the current conditions, you can hold on to the 1300-strike call, which closed at ₹9.05 last week. However, exit this option at the prevailing price if the stock price falls below ₹1,225 as this can lead to a sharp fall.
On the upside, in case the stock recovers and touches ₹1,280, exit the option contract at the going price.
I’ve bought SBI call option – 740CE of March expiry at ₹20. What is the outlook for the stock and the option? – Shrihari S
State Bank of India (SBI) (₹722): The stock, which started its latest leg of fall in December after facing a barrier at ₹870, fell below an important support at ₹740 a fortnight ago. This has turned the outlook bearish for the stock.
Although there can be a rise in price, it is likely to be capped at ₹740, which henceforth will act as a resistance.
Taking the prevailing price action into account, we can assume that the stock can extend the decline to ₹700. A breach of this can lead to a fall to ₹660.
Since the probability of a fall in price is high at the current juncture, we suggest liquidating the 740-call option, which closed at ₹14.15 on Friday.
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