I hold Federal Bank Oct 190-call option bought at ₹6. What will be the trend for the expiry? Should I hold or exit? – A N L Shankar
The Federal Bank (₹186): The stock has been in a long-term uptrend. However, since mid-August, it has not been trending. While it did not fall, the price was largely moving in the range of ₹182-200. Just above ₹200, there is a strong resistance at ₹205. Therefore, considering the prevailing price action, the next leg of the trend depends on which among ₹182 and ₹205 is breached first.
A breakout of ₹205 can lead to the stock establishing a fresh leg of uptrend, potentially taking the stock to ₹225 in the short term. On the other hand, if the price breaks below the support at ₹182, the outlook can turn bearish. In such a scenario, the stock can depreciate to ₹170 quickly.
That said, the likelihood of the stock to move out of the above-mentioned range before the end of this expiry is less likely. The more you wait, the more time decay will eat up the premium. So, we suggest liquidating the 190-call option you hold at the current level of ₹3.
Send your queries to derivatives@thehindu.co.in