I have H1B transfer going on with uscis. Question for passport renewal

I’m on currently H1B Visa and my H1B transfer in process. I have got receipt notice for h1b transfer. Now I wanted to apply for passport renewal. There is a question
Do you have legal status in the USA?* 1)Yes 2)No 3)Pending approval at USCIS

It depends on what is your current status.

I am assuming if you filed a h1b transfer, then you are still working with your current employer. If yes, then your current H1B should still be valid. You can use it for passport renewal.