Infosys Ltd Sees Heavy Call Option Activity Ahead of February Expiry

Market Performance and Price Dynamics

On 4 February 2026, Infosys shares opened sharply lower, declining by 4.95% from the previous close and touching an intraday low of ₹1,553.20, representing a 6.21% drop. This underperformance was more pronounced than the broader IT - Software sector, which fell by 4.96%, and contrasted with the Sensex’s modest gain of 0.16% on the same day. The stock’s 1-day return stood at -5.81%, underperforming the sector by 0.95 percentage points.

Despite this weakness, the stock remains above its 100-day and 200-day moving averages, though it trades below the shorter-term 5-day, 20-day, and 50-day averages, indicating a potential short-term bearish trend within a longer-term uptrend. Liquidity remains robust, with a 5-day average traded value supporting trade sizes up to ₹24.86 crores, and delivery volumes, while falling 7.34% against the 5-day average, still reflect active investor participation.

Call Option Activity: Strike Prices and Volumes

Options data reveals heightened call option interest in Infosys ahead of the 24 February 2026 expiry. The most actively traded call strikes are clustered around and above the current underlying price of ₹1,558.90, suggesting bullish positioning despite the recent price dip.

The strike price of ₹1,660 saw the highest number of contracts traded at 6,256, with an open interest of 4,570 contracts and turnover of ₹211.45 lakhs. This indicates strong speculative or hedging interest at this slightly out-of-the-money level, reflecting expectations of a rebound or volatility-driven trading.

Close behind, the ₹1,620 strike recorded 5,360 contracts traded, with open interest at 2,535 and turnover of ₹344.54 lakhs. The ₹1,640 strike also attracted significant volume, with 5,340 contracts traded and turnover of ₹248.84 lakhs, alongside an open interest of 3,024 contracts.

Interestingly, the ₹1,580 strike, just above the current price, saw 5,349 contracts traded with a substantial turnover of ₹643.38 lakhs, though open interest was lower at 1,897 contracts. The ₹1,680 strike, the highest strike price among the active calls, had 4,823 contracts traded and an open interest of 3,901, with turnover of ₹124.63 lakhs.

Interpreting the Call Option Flow

The concentration of call option activity at strikes ranging from ₹1,580 to ₹1,680, all above the current market price, suggests that traders are positioning for a potential upward move in Infosys shares over the next few weeks. The elevated open interest at these strikes, particularly at ₹1,660 and ₹1,680, indicates that market participants are either speculating on a price recovery or employing hedging strategies to manage risk amid volatility.

Given the stock’s recent underperformance and gap-down opening, the call buying could also reflect a contrarian stance, with investors anticipating a technical bounce or positive catalysts emerging before expiry. Alternatively, some of the activity may be driven by institutional players seeking to hedge existing short positions or to structure complex option strategies.

Fundamental and Technical Context

Infosys Ltd, with a market capitalisation of ₹6,71,028 crores, is a heavyweight in the Computers - Software & Consulting sector. The company’s Mojo Score stands at 77.0, reflecting a strong Buy rating, an upgrade from Hold as of 22 December 2025. This upgrade signals improved confidence in the company’s fundamentals and growth prospects, despite the recent short-term price weakness.

The stock’s market cap grade is 1, indicating its status as a large-cap stock with significant institutional interest and liquidity. The recent downgrade in short-term price momentum contrasts with the positive fundamental outlook, which may explain the mixed signals in options trading.

Technically, the stock’s position above its longer-term moving averages suggests underlying strength, while the dip below shorter-term averages points to near-term consolidation or correction. This technical setup often attracts option traders looking to capitalise on potential volatility and directional shifts.

Expiry Patterns and Investor Sentiment

The 24 February 2026 expiry is attracting the bulk of call option activity, with over 28,000 contracts traded across the five most active strikes. The turnover associated with these trades exceeds ₹1,572 lakhs, underscoring significant capital deployment in these derivatives.

Open interest data reveals that the ₹1,660 strike holds the largest outstanding position, suggesting that many traders are holding onto bullish bets or hedges at this level. The clustering of open interest around the ₹1,620 to ₹1,680 strikes indicates a consensus range where investors expect the stock to trade or break out.

This pattern is consistent with a market that is cautiously optimistic but aware of near-term risks, as reflected in the stock’s recent volatility and sectoral weakness. The IT - Software sector’s decline of 4.96% on the day adds to the cautious tone, yet the call option interest points to anticipation of a recovery or event-driven rally.

Implications for Investors and Traders

The current call option activity in Infosys suggests that market participants are positioning for a potential rebound or increased volatility in the near term. Investors should weigh the recent price weakness against the company’s strong fundamentals and upgraded Mojo Grade, which supports a positive medium-term outlook.

Traders might consider the elevated open interest and turnover at strikes above the current price as signals of bullish sentiment, but also remain cautious given the sector’s recent underperformance and the stock’s short-term technical challenges. The divergence between fundamental strength and price action highlights the importance of a balanced approach, combining technical analysis with fundamental insights.

For those looking to capitalise on options, the strikes between ₹1,580 and ₹1,680 offer a range of strategic entry points, whether for speculative call buying or hedging existing positions. Monitoring open interest changes and volume patterns in the coming days will be crucial to gauge the sustainability of this bullish positioning.

Conclusion

Infosys Ltd’s active call option market ahead of the 24 February 2026 expiry reflects a nuanced investor sentiment amid a backdrop of recent price declines. The strong volumes and open interest at strikes above the current market price indicate a cautiously optimistic outlook, supported by the company’s upgraded fundamental rating and large-cap stature. While short-term price action remains volatile, the underlying technical and fundamental factors suggest potential for recovery, making Infosys a stock to watch closely in the coming weeks.

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