Infosys Ltd Sees Heavy Call Option Activity Amid Bearish Price Action

Recent Price Performance and Market Context

Infosys shares have been under pressure over the past two sessions, declining by 6.43% cumulatively. On 12 February 2026, the stock opened sharply lower by 2.92% and touched an intraday low of ₹1,395.5, representing a 5.19% drop from the previous close. This underperformance is more pronounced than the IT - Software sector’s 3.73% fall and the Sensex’s modest 0.45% decline on the same day. The stock’s 1-day return stood at -4.99%, lagging the sector’s -3.81%.

Technically, Infosys is trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling a bearish trend in the short to medium term. Investor participation has also waned, with delivery volumes dropping 43.71% against the 5-day average, indicating reduced conviction among shareholders. Despite this, the stock maintains a relatively attractive dividend yield of 3.13% at current levels, which may provide some support to long-term investors.

Call Option Activity: Strike Prices and Expiry Dynamics

Options data reveals a surge in call option contracts for Infosys expiring on 24 February 2026. The most actively traded call strikes span a wide range, from slightly below the current underlying price to significantly out-of-the-money levels, suggesting diverse market views and strategies.

The strike price of ₹1,700, well above the current underlying value of ₹1,400.7, saw 6,547 contracts traded, generating a turnover of ₹23.05 lakhs and an open interest of 12,927 contracts. This high open interest at a distant strike indicates speculative bullish bets or hedging against a sharp upside move.

Closer to the money, the ₹1,420 strike recorded the highest volume with 6,990 contracts traded and a substantial turnover of ₹942.53 lakhs, though open interest remains moderate at 3,122 contracts. Similarly, the ₹1,440 strike saw 7,788 contracts traded with a turnover of ₹785.96 lakhs and open interest of 2,873 contracts. These strikes near the current price level suggest active positioning for a potential recovery or volatility play.

Other notable strikes include ₹1,480 with 7,295 contracts traded (turnover ₹375.84 lakhs, open interest 4,160) and ₹1,540 with 7,429 contracts traded (turnover ₹145.31 lakhs, open interest 10,783). The substantial open interest at ₹1,540 further underscores market interest in moderately out-of-the-money calls, possibly reflecting expectations of a rebound within the next two weeks.

Interpreting the Bullish Positioning Amid Weakness

The heavy call option volumes and open interest at strikes above the current market price suggest that traders are either speculating on a sharp upside reversal or employing hedging strategies to protect existing short positions. The ₹1,700 strike, in particular, stands out as a significant level where market participants are willing to pay premiums, despite the stock trading nearly ₹300 below this level.

This divergence between the spot price and option activity may also reflect anticipation of upcoming corporate developments, earnings announcements, or sectoral catalysts that could drive volatility. However, the recent downgrade in the Mojo Grade from Buy to Hold on 9 February 2026, with a current Mojo Score of 60.0, signals a more cautious stance from fundamental analysts, possibly due to valuation concerns or near-term headwinds.

Infosys’s market capitalisation remains robust at ₹5,97,010 crores, categorising it as a large-cap stock with high liquidity. The stock’s liquidity profile supports sizeable option trades, with the ability to handle trade sizes of approximately ₹30.9 crores based on 2% of the 5-day average traded value.

Sectoral and Broader Market Impact

The IT - Software sector has been under pressure, falling 3.73% on the day, reflecting broader concerns around global tech demand and currency fluctuations. Infosys’s underperformance relative to its sector peers by 0.81% highlights company-specific challenges or profit-taking. Yet, the active call option interest may indicate that some investors view the current weakness as a buying opportunity, expecting a rebound in the medium term.

Investors should also note the declining delivery volumes, which may imply reduced conviction among long-term holders. This dynamic, combined with the technical weakness, suggests that any upside move may be met with resistance unless supported by positive fundamental news or sectoral tailwinds.

Investor Takeaways and Outlook

For investors and traders, the current scenario presents a complex picture. The bearish price action and technical weakness caution against aggressive long positions at this juncture. However, the robust call option activity at multiple strikes above the current price indicates that some market participants are positioning for a recovery or volatility-driven opportunities ahead of the 24 February expiry.

Given the downgrade to a Hold rating and the stock’s underperformance relative to its sector, a prudent approach would be to monitor upcoming earnings, sector developments, and broader market cues before committing fresh capital. The high dividend yield remains a positive for income-focused investors, but the risk-reward balance currently favours selective exposure.

Traders interested in options should carefully analyse open interest trends and strike price concentrations to gauge market sentiment and potential price targets. The wide range of active strikes from ₹1,420 to ₹1,700 suggests that volatility expectations are elevated, and strategic option plays such as spreads or collars may be appropriate to manage risk.

Conclusion

Infosys Ltd’s recent trading activity highlights a divergence between spot price weakness and bullish option positioning. While the stock faces near-term headwinds reflected in its technical and fundamental assessments, the surge in call option volumes and open interest signals that market participants are preparing for potential upside or volatility ahead of the February expiry. Investors should weigh these factors carefully, balancing the stock’s large-cap stability and dividend yield against the current bearish momentum and cautious analyst outlook.

Unlock special upgrade rates for a limited period. Start Saving Now →