Coforge Sees Heavy Put Option Activity Ahead of December Expiry

Overview of Put Option Activity

The put options for Coforge, a mid-cap player in the Computers - Software & Consulting sector, have attracted considerable attention in the lead-up to the December expiry. The underlying stock price stood at ₹1701.2, with several strike prices witnessing substantial contract volumes and turnover.

Among the most actively traded puts, the strike price of ₹1660 recorded the highest number of contracts traded at 6,152, generating a turnover of approximately ₹402.8 lakhs and an open interest of 2,092 contracts. This level of activity suggests a strong interest in downside protection or speculative positioning around this price point.

Other notable strike prices include ₹1700, with 4,341 contracts traded and a turnover of ₹586.0 lakhs, alongside an open interest of 1,403. The ₹1620 strike also saw 4,224 contracts traded, with turnover near ₹120.9 lakhs and open interest of 577 contracts. The ₹1680 and ₹1600 strikes recorded 3,409 and 4,640 contracts traded respectively, with turnovers of ₹319.8 lakhs and ₹82.3 lakhs.

Expiry Patterns and Market Implications

The concentration of put option activity around the 30 December expiry date indicates that market participants are positioning themselves for near-term price movements. The clustering of open interest and traded volumes at strike prices slightly below the current market value of ₹1701.2 suggests a cautious stance, possibly reflecting expectations of price consolidation or a pullback in the short term.

Such activity often points to hedging strategies by investors seeking to protect gains or limit downside risk amid recent volatility. It may also indicate speculative bets on a decline, as put options provide leverage to benefit from downward price moves.

Price and Volume Dynamics

On the day of analysis, Coforge outperformed its sector by 1.16%, reversing a three-day decline with a gap-up opening of 2.25%. The stock touched an intraday high of ₹1711 and a low of ₹1637.1, reflecting a volatile trading session. Despite this, the weighted average price showed that more volume traded closer to the low price, signalling some selling pressure during the day.

Interestingly, Coforge was trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, indicating a broader downtrend in technical terms. However, investor participation showed signs of strengthening, with delivery volumes rising to 20.42 lakhs on 26 December, nearly doubling the five-day average delivery volume. This heightened liquidity supports active trading and the ability to execute sizeable trades, with the stock deemed liquid enough for trade sizes up to ₹9.96 crores based on recent average traded value.

Investor Sentiment and Hedging Considerations

The elevated put option volumes at strike prices ranging from ₹1600 to ₹1700 suggest a spectrum of investor sentiment. The highest open interest at ₹1660 and ₹1700 strikes points to these levels as key reference points for market participants. Investors may be using these puts to hedge existing long positions or to speculate on potential downside risks in the near term.

Given the stock’s recent price behaviour—opening gap ups coupled with trading below key moving averages—market participants appear to be balancing optimism with caution. The put option activity could be interpreted as a protective measure against possible price corrections or as a tactical play to capitalise on expected volatility around the expiry.

Sector and Market Context

Coforge operates within the Computers - Software & Consulting sector, which has shown modest returns in the recent session. The stock’s one-day return of 0.75% outpaced the sector’s 0.02% and the Sensex’s 0.11%, indicating relative strength despite technical headwinds. With a market capitalisation of approximately ₹56,061 crores, Coforge is classified as a mid-cap stock, attracting attention from institutional and retail investors alike.

The sector’s performance and broader market trends will likely influence Coforge’s price trajectory in the coming weeks, with option market activity providing a useful barometer of investor expectations and risk management strategies.

Conclusion: Strategic Positioning Ahead of Expiry

The pronounced put option activity in Coforge ahead of the 30 December expiry highlights a market environment where investors are actively managing risk and positioning for potential price fluctuations. The concentration of contracts at strike prices just below the current market level suggests a cautious stance, with hedging and speculative strategies both likely at play.

While the stock has demonstrated resilience relative to its sector and the broader market, technical indicators point to ongoing challenges. The interplay between price action, option market dynamics, and investor participation will be critical to monitor as the expiry date approaches.

For investors and traders, understanding the nuances of this options activity provides valuable insight into market sentiment and potential price scenarios for Coforge in the near term.

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