Infosys is one of the India's largest IT company and it has tremendous craze among IT employees and students in the campuses across India. It also has craze among traders and I've not seen anyone going short in that counter.
Infosys – I always try my hand during the time of results and not even once I got it perfectly right in my call. I might go on right path with long but I always have an option (derivative instrument) attached to it (meaning – I limit my profits by simply writing options).
Before going to the main picture I’ll tell you what happened last time. I went long and ofcourse I wrote an option and I limit my profits to Rs.100 (Rs.12500). I never anticipated huge short covering rally and that exactly happened in Infy. LIC made blockbuster profits by selling Infy around Rs.2900 levels which they bought atleast 30% below their selling rates.
During the result day I went long through futures and wrote call options. By this strategy I made Rs.10k and in total I made Rs.25k. If I didn’t fucked up with the hedge I could have made more than 50k and that is how I work in the markets. I’m too much afraid to carry unhedged positions during the times of big results like Infosys.
This time initially I went short around 2818 and wrote 2800 Put Option at 115. After couple of days I went long on May month futures at 2804 and wrote 2700 Call option at 190. After a day I wrote 3000 call option around 35. Yesterday I wrote 2600 Put Option at 35.
By this time you know how I’ve been fucked up in my position.
I was expecting neutral results from Infy and I thought it would only by 5%-10% (on the worst case) move on either side. Today morning I watched the results and I thought Infy could correct not more than 7%-10%. In that anticipation I go to my office and I had a shocker awaiting me.
When I made calculations I was sitting in the loss of 30k. How to recover?
I sat down and made huge calculations and eventually I believe I got it right. What I do is the lesson that is important for me.
I myself couldn't believe I got right and eventually got it right and I was actually sitting in the profit of Rs. 8 k. I'll explain in part 2 of this post.