Infy- Volume Picture ahead of earnings

Infy reports earnings on April 12th- Friday.

 

The date has been consistently rewarding for option players even after taking into account a volatility crush as the stock moves on impact. Previous earnings have seen a move of upto 10 % in a day and long positions in calls or puts have benefited.

 

I looked up the OI picture of the past 12 months in Infy and found that the participation in the instrument  this time is not high as OI is at a low point in the past 15 months of activity.

 

Have a look :

 

Infy%20Daily Infy- Volume Picture Ahead Of Earnings

 

The Future closed near 2820 today.

 

Price has found resistance near 3000 just like Feb 2012.

 

In the smaller time frame, price has been declining over the past few sessions and Infy had an inside day in the markets today.

 

Notice the seller at 2970 in the charts below :

 

Mp Infy Infy- Volume Picture Ahead Of Earnings

 

There is an inside day setup in the charts above.

 

This inside day breakout can potentially produce a move to either 3024 or to 2560 if earnings serve as a catalyst. This would be the larger swing range in my view or the max surprise in either direction.

 

Here's a look at how the chart is placed from a buyer- seller perspective.

 

Infy Cumu Apr Infy- Volume Picture Ahead Of Earnings

 

The chart above shows a seller from 3000 levels in the Apr future.

 

the vwap of the move down is at 2857 and the dpoc at 2904 is additional resistance.

 

A short covering move can happen only above these.

 

I would recommend a 2800 straddle ( buy) or a 2500- 3000 strangle if we continue to remain inside tomorrow.

 

The chart will be available in the MCX section tomorrow.