A look at the trading pattern of Infosys in the options segment indicates that traders are expecting the stock on results day to touch either Rs 2,600 or Rs 3,500. That means, market players are expecting, either a fall of 17 per cent or a rise of about 12 per cent from the current level. Infosys on Thursday closed at Rs 3,127.60 on the NSE.

In the last three quarters, Infosys has swung more than 10 per cent on the results day.

Open interest position for put contracts was highest at the strike price of 2,600, at 13.40 lakh shares. In call options, the 3,500-strike witnessed the highest concentration at 12.62 lakh shares. Both these options witnessed extraordinary volumes.

“If the open interest is concentrated at certain strikes, it signals the emergence of option writers, who generally have deep pockets to control the price movement. So, one can expect the Infosys stock to swing wildly, but it may struggle to breach the above range,” said a strategist in Chennai who handles clients for a Mumbai-based brokerage.

Unwinding OI

Infosys futures trading, on the contrary, saw unwinding of open interest positions, signalling not many players are willing to carry over their positions due to high volatility. About 1.85 lakh shares were squared off in Thursday’s trade ahead of the results. The Infy futures at Rs 3,120.9 is also trading in a discount with respect to the spot price of Rs 3,127.6.

Open interest is the number of options or futures contracts that are not squared off at the end of each trading session.


(This article was published on October 10, 2013)
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