Option traders on the NSE are betting that information technology bellwether Tata Consultancy Services Ltd. will fall below Rs 1,840 apiece by February 2019 after its third-quarter earnings and the last budget prior to the general election in May.
While it’s not possible to identify the trader, Bloomberg’s Block Trade Monitor shows a notional amount of more than $16 million was wagered in two trades— one buying put options on TCS at Rs 1,840, or 7 percent below Friday’s Rs 1,989.75 close; and the other one selling call options at Rs 2,200, or 10 more above the last close.
Trades like these are often executed to hedge against a decline in underlying s. The aggregate premium for the trades was about $0.34 million, or 2.05 percent of the notional is at risk.
On a relative basis, TCS shows strength with respect to Nifty, but the momentum has been declining consistently for the past 12 weeks. Since October, the stock witnessed a short build-up with open interest rising by 59 percent, while the price fell more than 11 percent.
The key option stability level to watch is at Rs 1,980 and a close below this will turn the bias negative.
For more futures and options data, click here
RECOMMENDED FOR YOU
POPULAR