India's troubled outsourcing giant gets even uglier.

If you are one of those who cannot stand Indian IT-outsourcing firms, you probably just got another feather in your cap. India's Satyam Computer Services Ltd. (NYSE: SAY) is turning out to be a house of cards. Shares closed at $9.35 yesterday after many recent troubles, and that was already down two-thirds from their highs. Things are worse this morning. Much, much worse.

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What began as a corporate governance issue back in December has now turned into a major financial scandal for the ages in India. The shares of Satyam Computer Services (SAY) has plummeted more than 90% in trading here at the NYSE Wednesday, a stark reminder that investors must always cover their backs ...

Filed under: Options

Satyam (NYSE: SAY) is recently trading at $1.44 in pre-open trading, below its close of $9.35. SAY Chairman Ramalinga Raju resigned after saying he falsified earnings and assets at India's fourth-largest software services provider. SAY January option implied volatility closed at 121, February at 114; above its 26-week average of 87, according to Track Data, suggesting larger price fluctuations.

Infosys (NASDAQ: INFY), a technology services firm based in India, closed at $26.60. INFY is scheduled to report Q3 EPS on January 12. INFY January 27.5 straddle is priced at $2.80, February 27.5 straddle is priced at $4.90. February option implied volatility of 63 is near its 26-week average according to Track Data, suggesting larger price movement.

Wipro Ltd (NYSE: WIT), a technology services company based in India, closed at $8.41. WIT is expected to report Q3 EPS in mid January. WIT February call option implied volatility is at 78, puts are at 86; near its 26-week average of 80, according to Track Data, suggesting non-directional price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Options Update: Satyam volatility elevated; shares collapse on accounting fraud originally appeared on BloggingStocks on Wed, 07 Jan 2009 08:52:00 EST. Please see our terms for use of feeds.

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We have two tier-1 firms out cautious or even negative on Satyam Computer (NYSE:SAY) this morning: - UBS notes Satyam stock has rallied more than 25% over the past week on increased probability of a management change. While they think a smooth management change would be positive for the stock, the market has not factored in a potential disruption to business caused by uncertainty by the management/ownership change, in firm's view. New contract wins will be the first to be impacted; additionally Satyam faces competition from TCS/Infosys Technology (INFY) in its existing client base in an already challenging demand environment. Among Satyam’s large accounts, TCS also has a meaningful[More...]

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