I have taken a call option on IDFC First Bank for February expiry with a strike price at ₹62. The call option was purchased at ₹1.52, and quantity purchased is 30,000. Should I hold, exit or buy more and average?


The stock of IDFC First Bank, trading at ₹56 at the time of writing this response, has seen a considerable fall over the past week. It is now trading below the support at ₹58.5 and the chart indicates further fall in the coming days towards the nearest support, which is at ₹53.

As long as the stock is below ₹58.5, traders should approach this scrip with a bearish inclination. Even if the stock rallies above ₹58.5, there is one more resistance at ₹61.6. So, as it stands, a recovery beyond ₹62. That is, the strike price of the option that you’ve bought looks less likely.

Considering the above factors, we suggest exiting the position. The option is now trading at around ₹0.65.

Alternatively, if you consider exiting 15,000 shares i.e., 1 lot of the contract now and exit the other one lot when price rises to ₹58. However, there is a risk of loss increasing if the stock falls. Nevertheless, holding one lot is less risky than holding two lots.

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