I had bought February expiry 470-strike call option on Tata Motors for ₹3.75 for February expiry. Should I hold till budget? What is your suggestion and target? – Anish
Technically, your decision to hold the call option is correct as the stock of Tata Motors (₹443.65) breached a key hurdle at ₹440 last week. Despite heightened volatility on Monday, the stock was able to stay above ₹440. While that by itself does not guarantee a rally, the odds look favourable to you as per the charts.
However, as with any event, we cannot predict how the market will react for the budget announcement. Therefore, you should be prepared for a fall as well.
Considering the above factors, our suggestion would be to hold the call option but place a stop-loss at your entry price i.e., ₹3.75 to prevent losses. If the stock rallies post budget, it could appreciate to ₹470 in which case the premium of 470-call might rise to ₹15 from the current level of ₹6.6. You can consider exiting at ₹12.
But if you do not wish to take risk, you might as well liquidate the option now with a profit.
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