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Trades fear reversal as Infosys jumps
Infosys exploded higher today, at least one big investor wants
to protect against a drop.
optionMONSTER's Depth Charge monitoring program detected the purchase of about 3,600 January 50 puts for $0.25 to $0.40. Volume is more than 11 times open interest at the strike, indicating that new positions were initiated
Those puts lock in the price where investors can sell shares in the Indian outsourcing company. They will appreciate rapidly in value if the stock falls but will become worthless if it doesn't drop. The investor is probably using them as insurance to protect today's profit against a near-term decline. (See our Education section)
INFY is up 16.75 percent to $51.31 in morning trading. The company surprised investors in the overnight session by raising its revenue outlook and reporting better-than-expected quarterly results.
Today's move brought the stock back to its highest level since April, when it gapped lower on a weak outlook. Given that it's back to this high, some traders may expect it to retreat, which would explain today's protection buying.
Total option volume in the name is 9 times greater than average so far today.