Infosys: Infosys is likely to move in a sideways range of Rs 2,550-2,850 in the short term. Only a break from this range will send a clear trend for the counter. A close above Rs 2,850 will lift the stock to Rs 2,974 initially and to Rs 3,105. On the other hand, a fall below Rs 2,500 will weaken the stock sharply to Rs 2,250.

F&O pointers: The stock witnessed short accumulation on Friday. The futures closed at a discount to the spot price. Cost of carry is negative, indicating that traders are not willing to carry over long positions, while option trading indicates a slightly positive bias — calls saw marginal unwinding of open interest, 2700 put witnessed heavy accumulation of open interest. This indicates a strong support for Infy at that level.

Strategy: Traders could consider a short strangle on Infosys. This can be initiated by selling 2,650 put and 2,850 call. They have closed at Rs 32.55 and Rs 14.50 respectively. Short strangle strategy is best suited when one considers the underlying stock is likely to move in a narrow range. While maximum profit is the premium collected, the loss could be unlimited if Infosys moves sharply in one direction i.e. either up or down. Besides, writing option involves high margin commitments. So this strategy is for traders who can afford to stomach high risks.

Traders can consider holding the position till expiry. Maximum profit will occur if Infosys settles between the strike prices at the time of expiry.