Trading in TCS (Tata Consultancy Service)

Trading in TCS (Tata Consultancy Service)

My call put option strategy on Infosys was a super hit with Rs. 2700 Put trading above Rs.400 giving an investment return of over Rs. Rs. 20,000. Now I would like to shift my focus on Trading with TCS. Today TCS is trading around Rs.1500 and with the results round the corner (Wednesday, 17^th April,2013), it is most likely that the price of TCS will be volatile.

The current market scenario of the Indian Stock market doesn’t look bright and with the result of Infosys being negative, playing a good call put option strategy would surely be beneficial. Hedging is always important while playing with options in the stock market. The importance of hedging can be highlighted with the outcome of Infosys result. The market was expecting a positive result and analyst were asking to buy Infosys for a target of Rs.3100 and see what happened. It was bloodshed with Infosys tanking over 21 percent in a single trading session, so you must hedge to earn profit in the Stock market.

Now the result of TCS may not bring about the same volatile to the share market but you can expect a movement of 5-10 % when the result comes out so if you invest in both call and put you can reap good rewards. The market is optimistic and expects good results from TCS, so my best bet would be buying a call of Rs.1600 which is priced about Rs.20 and for the purpose of hedging a Put of Rs. 1400 which also is about Rs.18. So if the results of TCS give a positive surprise than most likely that the Call of Rs. 1600 would be flying above Rs.100 and if the results aren’t in line with the market expectation than Rs.1400 put will come into action. So both ways you can earn a handsome income if you make a good trading call.

The call put strategy on TCS is good if the stock price is volatile, else you can lose some money which can’t be more than Rs.1000-Rs.2000. So the risk reward ratio is high and therefore traders can surely try and make some money before the results of TCS.