Infosys Bullish Option Bets Jump Toward Year High After Results

The number of bullish option bets in Infosys Ltd. jumped to the highest level in almost a year after the software company’s quarterly earnings report, even as its shares retreated from a record high.

Outstanding call options jumped to 55,175 contracts, according to data available as of 4:42 p.m. in Mumbai, from 43,224 on Friday, in a signal traders were disregarding Infosys’s reduced sales growth forecast in U.S. dollar terms. The open interest in call options is the highest since Oct. 2014, data compiled by Bloomberg show. Put options fell to 21,626 contracts from 23,752.

“Option traders are reading the results positively,” Alex Mathews, the head of research at Geojit BNP Paribas Financial Services Ltd., said by phone from the southern state of Kerala. “The results are not that bad and a stock which makes a new 52-week high normally attracts a lot of option buyers, rather than sellers.”

Infosys shares have outperformed BSE IT Index in the year to date
Infosys shares have outperformed BSE IT Index in the year to date

The Bengaluru-based company, India’s second-largest software exporter after Tata Consultancy Services Ltd., reported a 9.7 percent increase in second-quarter net income, beating estimates as it added 82 clients. Shares retreated as the company said its revenue is likely to grow 6.4 percent to 8.4 percent in the financial year ending March 31, less than its previous guidance of 7.2 percent to 9.2 percent growth. TCS is due to report its quarterly results on Tuesday.

Infosys shares closed 3.8 percent lower to 1,122.90 rupees, after jumping as much as 4.5 percent earlier on Monday to a record. The stock was the biggest drag by points on the 50-stock CNX Nifty index, which fell 0.6 percent to 8,143.60. The India VIX index, the benchmark gauge of option costs, rose 1 percent to 19.12.

Infosys call options with strike prices of 1,200 rupees and 1,140 rupees had the highest open interest, while among puts, the 1,100-rupee contract had the most number of outstanding contracts, data compiled by Bloomberg show. While open interest increased, the cost of one-month at-the-money options fell to 30.42 from Friday’s close of 42.50, a 16-month high.

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