F&O Strategy: Buy Infosys Call

The short-term outlook turned positive for the stock of Infosys (₹1,669.1). The IT major finds immediate support at ₹1,560 and ₹1,427. The nearest resistance is at ₹1,720. A close above that level will trigger a fresh rally. In that event, the stock can reach ₹1,815. We expect the stock to move with a positive bias.

F&O Pointers: Infosys has witnessed a healthy rollover of 81 per cent to February series. Infosys February futures, at ₹1,676.05 against spot close of ₹1,669.10, indicates a marginal premium. The February futures added open positions steadily. From 3.8 lakh shares on January 12, open positions jumped to 9.32 lakh shares. Option trading indicates that the stock could move between ₹1,500 and ₹1,800.

  • Also read: Mastering Derivatives: Analysing open interest

Points to ponder: Mid-term Budget (on February 1) can trigger a volatility in the stock; and February contracts will have one of the longest trading days (32 days).

Strategy: Consider buying 1,700-call on Infosys. The options closed with a premium of ₹32.40. As the market lot is 400 shares, this would cost traders ₹12,960, which would be the maximum loss. This will happen if Infosys fails to cross ₹1,700.

On the other hand, profit potentials are high, if the stock rallies sharply. A close above ₹1,732.40 will start changing the position profitable. We advise traders to hold the position for at least two weeks.

Initial stop-loss can be placed at ₹20 and can be shifted to ₹30, if the premiums move past ₹38. Then adjust it suitably for individuals’ risk-taking ability. Traders can aim for an initial target of ₹60.

Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading

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