What options strategy should investors look for in TCS ahead of Q4?
2 min read . Updated: 11 Apr 2023, 07:25 PM IST
Premium- In its options strategy report, Axis Securities said, TCS closed on a Negative note with the loss of around 8% in March Expiry with rollover of 92% v/s 3month average of 95%, indicating that the slightly positions have trimmed.
IT giant TCS witnessed selling pressure on Tuesday ahead of its Q4 earnings. On BSE, TCS shares dipped by over 2%. Not just that, the majority of IT stocks were in the red ahead of the company's results. In the equity derivatives segment, Axis Securities gives a result strategy in TCS to traders.
In its options strategy report, Axis Securities said, "TCS closed on a Negative note with the loss of around 8% in March Expiry with rollover of 92% v/s 3month average of 95%, indicating that the slightly positions have trimmed."
On Tuesday, in equity derivatives, the TCS option price stood at ₹3,205 on NSE.
The brokerage added that in April expiry, the stock is currently up by 3.5% while there was a marginal decrement in open interest to the tune of 1%, indicating Short Covering witness in the Stock.
Interestingly, Axis Securities revealed that in general, "during the announcement of result session we have observed that Infosys moves in the range of 3-5% either on the upside or on the downside and hence we are advising the below mention strategy."
Hence, Axis Securities recommends "Buy" in TCS at a strike price of 3340 (CALL) in the range of 17 – 19, while Sell at a strike price of 3200 (CALL) in the range of 70-72.
Also, the brokerage gave a "Sell" recommendation on TCS for a strike price of 3200 (Put), and "Buy" for a strike price of 3060.
The brokerage expects max reward to be around ₹17,159 and max risk to be around ₹-7,359.
Overall, the profit range is seen at the upper case of 3280 and lower case of 3120 on TCS.
"Kindly enter & exit all the legs in strategy together and square off the strategy before the session closes," Axis Securities note said.
Meanwhile, on stock exchanges, on BSE, TCS shares closed at ₹3,214.25 apiece down by 1.50%. The stock had dipped by over 2% with an intraday low of ₹3275 apiece. TCS is the second most valued company and the largest IT firm in terms of market share. As of April 11, the company's m-cap is over ₹11.76 lakh crore.
During December 2022 quarter, TCS garnered a net profit of ₹10,846 crore attributable to shareholders on a consolidated basis up by 11.02% YoY and 3.98% QoQ. The net margin stood at 18.6% for the quarter, whereas the operating margin stood at 24.5% contracting by 0.5% YoY.
On the other hand, TCS consolidated revenue from operations came in at ₹58,229 crore increasing by 19.11% YoY and 5.28% QoQ. In terms of constant currency, the revenue growth was at 13.5% YoY driven by business in North America and the UK. TCS' order book stood at $7.8 billion as of December 31, 2022, versus $8.1 billion in 2QFY23.