I’m holding one lot of January expiry Biocon 320-put option bought for  ₹1.15. Should I hold or exit now? – Nijenthan

Biocon (₹373):  The stock has outperformed Nifty 50 in the recent months. Nevertheless, it has largely been moving in a sideways trend since July last year. Except for a brief fall to ₹303 in October, the price oscillates between ₹325 and ₹385. The chart shows that the price region between ₹385 and ₹395 is a resistance.

Currently trading near the upper end of the range, the stock could see a drop in price, probably to the range bottom at ₹325, where the 50-day moving average (DMA) lies. That said, there is support at ₹350, where the 20-DMA coincides.

Since we might see a price drop from the current level, you can hold onto the 320-put option. That said, while a drop to ₹350 can happen soon, a decline below ₹320 is less likely.

In case the stock declines from the current level to anywhere between ₹350 and ₹335 in about a week from now, the 320-put option’s premium can rise between ₹1 and ₹3. So, you can look for a target of ₹2.

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