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 opened.
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 Education section)
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 the session.
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