Infy: Chart setup, Risk Reward levels & my trading strategy

Infy (1492)

We are looking at weekly candlestick chart

In Dec 2022, I had mentioned the level of 1444 to be of crucial importance. The stock made a low of 1446 and then has seen smart bounce from thereabouts.

Currently the stock is in retracement mode. Important for Infy to hold on to 1480-1460 zone

If withheld then stock can be looked with an upside target potential of 1666 / 1735.

SL 1444

My trading strategy: Bullish Calendar Put spread

Take care and safe trading...!!!

Disclaimer
- The view expressed here is my personal view
- Past performance is not a guarantee for future predictions
- Use this for educational purpose
- Any decision you take, you need to take responsibility for the same
- It's your hard earned money. Treat it wisely
- Trade / Invest keeping in mind your trading style, goals and objectives, time horizon & risk tolerance
- if trading in F&O, understand that F&O trading involves risk
- Do take proper risk management measures
- Do your own analysis and consult your financial adviser if need be

Comment:

Been terribly wrong with my Analysis...

Stock is down roughly 90 odd points... What's my loss ?
just 1.2 points.

Surprised?

This is where Strategy comes in to picture.
I had taken a Bullish Calendar Put Spread strategy in Infy.
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How this strategy works?
As the name suggests Calendar Spread means involvement of Buying of Option in 1 month and Selling of Options in another month.
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For your learning and understanding purpose sharing the details
When times are tough you need to better your skills to survive...
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My initial view was Bullish on Infy so
Step 1
I shorted April expiry 1500 Strike Price Put option at 51 on 9th Mar

Implication: if Infy moves higher or stayed above 1500 I would have stood to gain a maximum of 51 points multiplied by Lot size by April expiry.

However I was not comfortable with overall market set up, hence wanted to protect myself.. ( you can read my view on Nifty and Banking stocks and you will understand )

So STEP 2:
simultaneously I bought 1480 March series Put at 27.
(Now my Net Premium receivable 51-27 = 24 points at the time of taking position). I limited my max profit to just 24 points but since the Position is now hedged my margin requirement came down, my ROI potential improved and most importantly my risk got nullified.
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How Risk got nullified?
Understand here:
Buying 1480 Put option gave me protection for any fall below 1453.

1500 Put short gave me in built protection for a fall up to 1449 till April expiry.

So technically you see my downside is very well protected.

Now that you have understood the psychological part and theoretical part, let's see how things look in practical world
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Current Price of
1500 April series Put option: 101 ( Loss of 50 points)
and
1480 Mar series Put option : 75.8 ( Profit of 48.8 points)

Loss in strategy = 1.2 points only...
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The point I'm trying to say here I am no super human... I too get it wrong at times. But this will help you understand the importance of Risk Management. If you can start managing your risk, you can increase your chances to stay profitable.

Trust you find this lesson interesting enough for you to learn more...

Trade closed manually:

Strategy Update

1500 Call April series squared off @ 110 (Loss of 59 points)

14800 Call Mar series squared off @ 98 (Profit of 71 points)

Net Profit 12 points

Despite Infy going terribly wrong in analysis; the strategy helped to be in control of the situation and eventually come out in Profits

Happy & Safe trading...!!!