Traders bet big on price swings in SKS Microfinance stock

MUMBAI: Traders, quick to nip at profits in stock options based on sharp movements of the underlying shares, have created bets on SKS Microfinance ahead of the company’s first quarter results on Wednesday.

They are buying a strangle —a strategy involving simultaneous purchase of a call and put option of different strike prices — of SKS on hopes that the share would move sharply either side. By purchasing the options, traders are betting that the values of either the call or put would surge immediately or in the days after the results. Derivatives analysts like Navneet Daga of IIFL on Tuesday suggested simultaneous purchase of an SKS call at Rs 550 and a put at Rs 520.