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
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. ICICIdirect.com 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’