Traders Bet on 6-8% Swing in Infy Af­ter Fri­day’s Q4 Num­bers

Among Infy call op­tions, max open in­ter­est is at ₹ 1,240 strike. In puts, high­est con­cen­tra­tion is at ₹ 1,100 strike

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Mum­bai: Traders look­ing to bet on In­fosys’s fourth-quar­ter earn­ings can hope for a 6-8% move ei­ther side af­ter the re­sults if op­tions build-up is any­thing to go by. The soft­ware big­gie will an­nounce its March quar­ter re­sults on Fri­day —a hol­i­day for fi­nan­cial mar­kets on ac­count of Ram Navami.Mar­ketswillal­sobeshu­ton Thurs­day for Ambed­kar Jayanti.

An­a­lysts said traders have al­ready cre­ated po­si­tions in In­fosys op­tions that sug­gest they do not ex­pect the stock to rise be­yond ₹ 1,240-1,260 and fall be­low ₹ 1,100. In the last five quar­ters, the stock has given a move of about 5-8% on ei­ther side on its re­sults days.

“The call-put data in­di­cates the Street is ex­pect­ing 7-8% move in the counter on ei­ther side. The ma­jor trend is pos­i­tive but al­ready it has seen some mo­men­tum,” said Chan­dan Ta­paria, de­riv­a­tive an­a­lyst at Anand Rathi Fi­nan­cial Ser­vices.

Among In­fosys call op­tions, max­i­mum open in­ter­est con­cen­tra­tion is at the ₹ 1,240 strike. An­a­lysts said the strong build-up of po­si­tions at higher strikes sug­gest mar­ket par­tic­i­pants ex­pect lim­ited up­sides in the stock. “Call writ­ing has hap­pened in most of the strikes above 1,200 and have more than 20 lakh shares out­stand­ing. This in­di­cates that even in case of pos­i­tive re­sults, mar­kets are not ex­pect­ing it to move above 1,240- 1,250 level,” said Yo­gesh Radke, head of quan­ti­ta­tive re­search at Edel­weiss Se­cu­ri­ties.

Among­puts,the­high­est­con­cen­tra­tion is at strike of ₹ 1,100, also the stock’s 200- day mov­ing av­er­age (DMA), a key sen­ti­ment in­di­ca­tor. An­a­lysts said traders who bought In­fosys op­tions ear­lier this month have al­ready made 10-12% with pre­mi­ums(op­tion­prices)ris­ing.Im­plied volatil­ity (IV) — a key as­pect of op­tions pre­mium pric­ing — of In­fosys op­tions has risen from 33% to 41%. When IVs rise, op­tions pre­mi­ums a l s o move u p. An­a­lysts ex­pect In­fos­ysop­tions’IVs to peak near 50 aheadof there­sults and fall to 25 fol­low­ing the re­sult.

Ta­paria of Anand Rathi ad­vises sell­ing op­tions at higher lev­els as im­plied volatil­ity usu­ally falls sharply fol­low­ing re­sults. “Traders are sug­gested to trade with Iron but­ter­fly for In­fosys to gain from higher op­tion pre­mi­ums which may fall post the num­bers be­cause of de­cline in its high volatil­ity,” he said. ICICIdi­ ex­pects the stock to rise to ₹ 1,350 if it closes above ₹ 1,170 led by short cov­er­ing. “As the stock is even­tu­ally mov­ing higher, a good guid­ance would lead to a sus­tain­able up-move,” the bro­ker­age said.

‘Traders are sug­gested to trade with Iron but­ter­fly for In­fosys to gain from higher op­tion pre­mi­ums’

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