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Call Options Plays
Put Options Plays
None INFY

New Calls

None today.
 

New Puts

Infosys Tech. - INFY - cls: 69.92 chg: -1.08 stop: 75.01

Company Description:
Infosys is a leading global technology services firm founded in 1981. Infosys provides end-to-end business solutions that leverage technology for our clients across the entire software life cycle: consulting, design, development, re-engineering, maintenance, system integration, package evaluation and implementation. In addition, Infosys offers software products to the banking industry, as well as business process management services through its majority-owned subsidiary, Progeon. (source: company press release or website)

Why We Like It:
The market strength has been great for our bullish plays but we don't think it will last. The rally is looking more and more overbought and extended and we don't want to chase it. That's why we're looking for stocks poised to move lower when the broader indices finally pause and reverse course. INFY looks like a good candidate for puts. Technically the stock has produced what appears to be a double-top pattern under resistance at the $80.00 level. The move also produced a Point & Figure chart sell signal that points to a $61.00 target. Shares turned lower after investors responded negatively to their July 12th earnings report. Analysts are worried that growth expectations are too high based on their recent performance. Plus, INFY's head of sales resigned on July 19th and that's rarely a good sign for a company. We are going to suggest puts with the stock under $72.00 and its simple 10-dma. We'll use a wide stop loss at $75.01 but more conservative traders may want to consider a tighter stop near the top of the gap down in the $74.00 region. Our target is the $62-60 range while our time frame is about eight weeks so there is no need to rush right out and buy puts. Plan your entry. Some traders may want to wait and see if the NASDAQ fails to breakout over the 2200 level first before initiating new bearish positions here in INFY. Another risk readers should be aware of is the India stock market is trading near new highs. A continued rally there could stall any descent in the U.S. shares of INFY.

Suggested Options:
We are suggesting the September puts but October work well and have more open interest.

BUY PUT SEP 75.00 IUN-UO OI= 0 current ask $7.10
BUY PUT SEP 70.00 IUN-UN OI=20 current ask $4.10
BUY PUT SEP 65.00 IUN-UM OI=40 current ask $2.15
BUY PUT SEP 60.00 IUN-UL OI=16 current ask $1.35

Picked on July 20 at $ 69.92
Change since picked: + 0.00
Earnings Date 07/12/05 (confirmed)
Average Daily Volume = 922 thousand
 

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