I am holding 22,000 quantities of Reliance 3000 Feb29 call option bought for ₹30. Shall I hold it or exit? – Santhosh Reddy

Reliance Industries (₹2,975): The stock has been charting sideways for the last two weeks. It has been oscillating within the narrow range of ₹2,920-2,975. However, the broader trend is bullish, and the stock is expected to break out of this range anytime.

Such a move can take the stock price to ₹3,200 or potentially to ₹3,300 in the near-term. So, opting for the call option is a good strategy. However, since the February series are nearing expiry, these contracts will experience considerable time decay. This can lead to losses if the stock stays in the range for some more time before the potential breakout.

Also read: F&O Query: Should you hold or exit ICICI Bank call options?

Hence, we would recommend that you exit the February expiry call options and buy March contracts so that you will have more time for the possible rally to play out. Preferably, you can choose at-the-money (ATM) or near ATM strike calls rather than buying out-of-the-money (OTM) strikes. Always have a check on the lot size and do not over leverage.

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