The chart to watch for Infosys is the monthly chart. In the monthly chart, you can find this month's drop moving through the 60- and 90-month moving average. Both these levels offer support and resistance. More important, both offer a history of reactions with price retracements that suggest Infosys will once again trade above $40 soon. The next level of support doesn't come into play until $22. Infosys is far from testing the key support. Revenue is a bright spot for Infosys. Infosys is running at a full sprint with revenue hurtling over $7 billion annually. That is an extension of over 50 percent over 2010. Infosys' management blames reluctance of corporate buyers to purchase due to the economic situation. Based on sales it appears reasonable, and likely a short-lived obstacle.
Microsoft and Oracle have revenue growth at a slower rate than Infosys. However, the starting point numbers are much greater. This chart does help illustrate Infosys' ability to execute. INFY Revenue data by YCharts
For stability, I am a big fan of Microsoft and, to a lesser extent, Oracle. Microsoft offers a 2.7 percent dividend. Oracle offers a dividend, but it's less than one percent. I like buying on both using put options as an entry vehicle. What's the best play with Infosys? There should be a very attractive trade coming up Friday and or Monday. Near the end of the day, if still trading lower, sell out of the money puts. Fear of continued losses tends to push portfolio insurance prices up dramatically, while at the same time the stock should bottom. It's not one to get greedy with, hold on for a few days and as the implied volatility falls (hopefully with a nice dead cat bounce) exit out with a quick hit and run for profits. Otherwise for longer term investors, the best play is to wait until a few weeks to ensure Infosys has found a base of support and we are closer to the next earnings release. At the time of publication the author did not hold a position in any stock mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.