What options trading indicates on Infosys stock movement?

KS Badri Narayanan | Updated on December 12, 2020

Option trading indicates that the stock could move in a range of ₹1,100-1,200

The outlook on Infosys (₹1,163.20) remains positive. The stock finds an immediate support at ₹1,112 and the crucial one at ₹1,068. A close below the latter will alter the positive outlook for the short term. However, if Infosys maintains the current momentum, it can touch ₹1,350.

F&O outlook: The futures rules in a premium of just about a rupee. Over the week, Infosys futures shed open positions from 3.82 crore shares to 3.67 crore shares. Option trading indicates that Infosys could move in a range of ₹1,100 - ₹1,200.

Strategy: We advise traders to consider a bull-call spread strategy. This can be initiated by selling 1,200-strike call option (December expiry) and simultaneously buying 1,160-strike call option (December expiry). These options closed with a premium of ₹19.25 and ₹35.10, respectively. That means the net spend for traders will be ₹15.85 per lot, i.e., ₹9,510 (market lot: 600 shares). This will be the maximum loss one can suffer in this strategy, if Infosys closes at or below ₹1,160 at the time of expiry. On the other hand, a profit of ₹14,490 is possible should Infosys close at or above ₹1,200 at the time of expiry. This will be the maximum profit.

We advise traders to hold the position till expiry.

Follow-up: Hold Sun TV short strangle positions, even as the stock climbed last week.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on December 12, 2020
This article is closed for comments.
Please Email the Editor