One big investor is positioning for downside in Infosys.
optionMONSTER's Depth Charge tracking system detected the purchase
of about 2,800 March 55 puts for $0.40 and the sale of roughly the
same number of April 60 calls for $1.55. Volume was above open
interest in both strikes, indicating that new positions were
The trade resulted in a credit of about $1.15 and will protect
against a drop in the next two weeks. It also locks in a maximum
selling price of $60 in the subsequent five weeks but, including
the credit earned, that would actually be $61.15.
The investor probably owns shares in the Indian outsourcing company
and is using the options as a hedge. The strategy combines elements
of a collar strategy with a diagonal spread. (See our
INFY fell 1.06 percent to $57.08 yesterday and has been drifting
lower since late February. A weak outlook on Jan. 12 caused the
shares to gap lower, but they quickly rebounded and have now pulled
back to their old support level.
Overall option volume was more than 5 times greater than average in
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