I’m holding the following options: Reliance 1360-call bought for ₹33 and ICICI Bank 1290-call bought for ₹35. Kindly advise whether I should hold or exit – Nagaraj
Reliance Industries (₹1,295): The stock has been steadily depreciating since early October after facing a resistance at ₹1,520. It has opened today’s session on the back foot and has lost over 3 per cent so far today. The bears are clearly in control.
Nevertheless, the price region between ₹1,285-1,300 is a good base for the stock, giving some hope for the bulls. However, a support doesn’t necessarily mean a bullish trend reversal around the corner.
Technically, only a recovery past ₹1,325 can be taken as a signal for a sustainable rally. In such a case, the upside can extend up to ₹1,370. A rally past this level is not a guarantee.
In case the stock slips below ₹1,285, the bears can drag the price further lower, potentially to ₹1,240 or to ₹1,200. Overall, there are no encouraging signs for the bulls at this juncture. Therefore, we suggest liquidating the option contract at the current level.
Consider buying call options only after the stock surpasses ₹1,325.
ICICI Bank (₹1,270): The stock has been on a decline since last Wednesday. The price action hints at further fall and the nearest support is at ₹1,250. At the moment, whether the stock can recover post the potential fall to ₹1,250 is a 50 per cent probability event.
If there is a rally from ₹1,250, the price can rise to ₹1,330. However, if the stock breaches the support at ₹1,250, the sell-off can intensify. Consequently, there can be a downtrend towards ₹1,225, the nearest notable support below ₹1,250.
Given the prevailing conditions, we suggest exiting the option and buy the same strike or a lower strike call when the price softens to ₹1,250.
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