The stock's latest peak comes amid historically low implied volatility
Tech concern Infosys Ltd ADR (NYSE:INFY) is up 0.5% at $21.82 this afternoon, after earlier hitting a fresh all-time high of $21.92. The security has been steadily climbing up the charts since May, with support from its 40-day moving average, which contained a July pullback. What's more, the shares boast a 73.4% year-over-year lead, and are currently flashing a historically bullish signal that could help INFY notch even more records in the near future.
Digging deeper, Infosys stock's peak comes amid historically low implied volatility (IV), which has been a bullish combination for the equity in the past. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been another six times over the past five years when the stock was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) stood in the 20th percentile of its annual range or lower. This is currently the case with INFY's SVI of 20%, which stands in the 1st percentile of its 12-month range.
White's data shows that one month after these signals, the equity was higher 83% of the time, averaging a 5.8% return. From its current perch, a similar move would put INFY at a fresh all-time high of $23.08.
Analysts are still split towards the security, indicating it may be overdue for a fresh round of upgrades. Of the 10 in question, five still sport a tepid "hold" or worse rating, while five say "strong buy."
An unwinding of pessimism over in the options pits could create more tailwinds for the security. This is per INFY's stock's 10-day put/call volume ratio of 1.91 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than all other readings in its annual range.
Plus, the security's Schaeffer's Volatility Scorecard (SVS) ranks at 78 out of 100. In other words, Infosys stock tends to outperform these volatility expectations -- a boon for option buyers.