The bears have tasted the blood of Infosys and are moving in for the kill.
OptionMonster's tracking systems detected the purchase of 14,651 July 35 puts for $1.65 and the sale of 14,021 August 40 calls for $0.45. The transaction resulted in a net debit of about $1.22 per put contract bought.
Options Trading School:
The move was almost identical to a similar trade last week by an investor who paid about $0.25 per put contract bought. The India-based technology outsourcing company had fallen about 4.5 percent since then, apparently giving the investor confidence to increase the bet against the outsourcing firm.
The thesis for the trade may have been based upon the stock failing to break a resistance level on its chart at $37.50.
INFY stock is up 2.22 percent to $35.05 in early afternoon trading Thursday. The transaction from this week and last week are instances of risk-reversal strategies, unhedged one-way bets that offer huge potential gains while carrying the risk of unlimited losses if the stock moves in the wrong direction.
Options volume in the name was more than seven times average today.
More Tech Consulting/Outsourcing Firms:
Satyam Computer Services
Cognizant Technology Solutions
Automatic Data Processing
David Russell is a reporter and writer for OptionMonster.