Month: July 2013

Infy reports on Friday morning.

 

This chart below shows the impact this one announcement has had on price with delivery buying and selling seen each time the announcement is made. The results announcement is big enough to create large moves in the instruments, such that even far OTM strikes have become multi baggers in a matter of minutes.

 

 

The chart above shows the big price changes from march 12.

 

The brown shaded region is the net OI in futures and the big moves of the past 12 months have ensured that the OI is never at a high point just before earnings day in futures.

 

Let's look at the OI picture in Options.

 

 

Volume is seen picking up at 2500 strike whereas 2200 put and 2700 call are also seeing huge buildups.

 

So there is enough speculative activity in the Options segment as expected.

 

Here is a multi day profile chart of Infy cash  ( not future).

 

 

 

The chart is tracking the seller from 03rd June , the double distribution thereafter which ended up as a balance and a move away from the balance value area high  of 2462 cash.

 

Clearly the Buyer is in control at the moment as he tries to push above composite value high but there is an overhead seller in the form of the single prints at 2532 and above.

 

The profile would project a move above 2532 to bring 2622 and 2700 or about 170 points from 2532. The call base at 2700 seems to confirm this view.An unlikely extreme move above 2700 can also bring into picture the pre- earnings low of 11th April near 2846.

 

The Buyers will lose control quickly below 2462 value high of the composite leading to a quick long liquidation which has potential to drop down to 2380 in minutes.

 

Breakdown is below 2342 and would lead to 2174 immediately. The Put base at 2200 seems to confirm this view.

 

All in all if the past manages to stay with Infy as it announces we can see that move to either 2200 or 2700 from current levels.

 

After a bad report last earnings, the threat of an even poorer performance is mitigated a bit which would explain the increased levels of buying we have seen in the stock.

 

The 2500 strike currently at about 280 has in my opinion the best and the worst figured at 2200- 2700 in the range.

 

The proper strategy to me appears to be to sell the naked straddle at 2500 for a net credit of 280 and take protection at 2200 put and 2700 call for a net inflow of about 170/-. This is only for experienced writers and quick fingers!.

 

The other option remains to buy a 2200 put and a 2700 call and let the earnings news play out.

 

 

 

Infy results Preview

The Nifty future hit the objective given by the profile in the previous post – https://vtrender.com/content/nf-july-quick-profile-check and a round of profit booking was obvious immediately.

 

Here is the updated chart showing the composite structure :

 

 

When you trade through profile it is important to see the market behavior as continuation or change and we are again at one such point this morning.

 

Yesterday we had an auction complete which was evident in the structure of the gaussian curve which showed up at close. Auctions begin or end in single prints or such curves.

 

Looking at the profile above once again we see 5785- 5770 as an important level for the day and a break of that can start a move to 5720 to fill up a poorly traded volume zone between 5700 and 5900 on our charts.

 

Back to today's session and it is important to see how short the market was in yesterday's session.

 

The session itself was slow and random and in itself it tells the trader than there is activity brewing below the surface.

 

In such cases it helps to look at a one minute OrderFlow chart of the activity per minute traded which gives an idea of the limit orders placed and executed. This chart is courtesy Viren ( @VirenRasquinia) .

 

This is a chart of orders ( limit and market) placed yesterday.

 

 

The chart is the same as your Bid ask window of the trading terminal which gives you the price and quantities, but here you get to see a larger view than the numbers we see on screen.

 

Clearly the Buy pane lacked buyer conviction all day yesteday as buy orders were mostly absent.

 

The flow was definitely dominated by sellers and we also had the day's largest seller show up near 5872 yesterday. That should explain the gap down as there were a sizeable number of shorts created per the chart..

 

Stay with levels , not your bias and watch the OrderFlow!.

 

 

Nifty July