Is there anyway I can drag the text out from terminal and release in some other terminal or text file?
I am asking for a laptop, where a touchpad is used.
As @souravc suggested, instead of actually visually dragging it, you can copy paste using your mouse/touchpad and without involving the context-menu.
To copy select the text to be copied by dragging the mouse.
On a desktop: To paste, middle click where you want to paste.
On laptop: Press both the left click and right click together.