Rs 1,140 Puts Draw 4,640 Contracts on Infosys Ltd Ahead of 29-Sep Expiry

Put Options Event and Cash Market Context

On 2 September, Infosys Ltd saw significant put option activity clustered around three strikes: Rs 1,140, Rs 1,120, and Rs 1,100. The Rs 1,140 strike recorded 4,640 contracts traded with a turnover of ₹617.12 lakhs and open interest of 3,814 contracts. The Rs 1,120 strike saw 5,112 contracts traded, turnover of ₹517.54 lakhs, and open interest of 3,575. Meanwhile, the Rs 1,100 strike had the highest open interest at 6,314 contracts, with 5,833 contracts traded and turnover of ₹411.34 lakhs.

The underlying stock price was Rs 1,139.1, marginally below the Rs 1,140 strike and above the Rs 1,120 and Rs 1,100 strikes. The stock declined 1.04% on the day, moving in line with its sector and the broader Sensex, which fell 0.90%. This price action occurred within a narrow intraday range of Rs 2.8, suggesting limited volatility despite the active put trading. Infosys Ltd currently trades above its 5-day and 50-day moving averages but remains below the 20-day, 100-day, and 200-day averages, indicating a mixed technical picture.

Infosys Ltd also recorded a delivery volume of 60.32 lakh shares on 1 September, a 19.95% increase over the five-day average, signalling rising investor participation despite the slight price dip.

Heavy put activity on a stock trading near key moving averages — what does this mean for positioning in Infosys?

Strike Price Analysis: Moneyness and Intent

The Rs 1,140 put strike is effectively at-the-money (ATM), given the underlying price of Rs 1,139.1. The Rs 1,120 and Rs 1,100 strikes are out-of-the-money (OTM) puts, positioned approximately 1.7% and 3.4% below the current price respectively. The proximity of the Rs 1,140 strike to the underlying price suggests that this put option is likely being used either as a hedge against near-term downside or as part of a directional bearish bet.

OTM puts at Rs 1,120 and Rs 1,100, with substantial open interest and turnover, could indicate protective hedging by investors seeking to guard against a moderate pullback. Alternatively, these strikes might be targets for put writers collecting premium, anticipating the stock will hold above these levels through expiry.

Are these OTM puts a sign of cautious hedging or a bullish premium collection strategy?

Interpreting the Put Activity: Multiple Perspectives

Put option activity can be ambiguous. The three main interpretations are: directional bearish positioning, protective hedging of existing long stock holdings, or put writing as a bullish bet. The Rs 1,140 strike’s ATM status and the stock’s slight decline on the day suggest some degree of bearish positioning. However, the limited price movement and the stock’s position above short-term moving averages complicate this view.

Given the stock’s recent stability and the fact that the Rs 1,120 and Rs 1,100 strikes are OTM, the activity at these lower strikes is more consistent with hedging. Investors may be protecting gains or limiting downside risk in a market environment where the broader indices are also under pressure. Put writing is also plausible, especially at the Rs 1,100 strike, where open interest is highest, implying that some market participants are comfortable collecting premium, expecting the stock to remain above this level.

How does the interplay of strike prices and stock momentum clarify the dominant put strategy in Infosys?

Open Interest and Contracts: Fresh Positioning or Adjustments?

The ratio of contracts traded to open interest offers insight into whether the activity represents fresh positioning or adjustments to existing positions. For the Rs 1,140 strike, 4,640 contracts traded against an open interest of 3,814, a ratio of approximately 1.22:1, indicating a moderate level of fresh activity. The Rs 1,120 strike shows a similar ratio of 1.43:1, while the Rs 1,100 strike’s ratio is 0.92:1, suggesting more of a position adjustment or roll-over at this strike.

This pattern supports the view that the Rs 1,140 and Rs 1,120 strikes are seeing new hedging or bearish bets, while the Rs 1,100 strike may be dominated by put writers or holders managing their exposure. The turnover figures, with the highest at the Rs 1,140 strike, reinforce the significance of this strike in the current options landscape.

Cash Market Context: Technicals and Delivery Volumes

Infosys Ltd trades above its 5-day and 50-day moving averages but remains below the 20-day, 100-day, and 200-day averages. This mixed technical setup suggests short-term support but longer-term resistance. The Rs 1,140 put strike roughly aligns with the 50-day moving average, a common technical support level, which supports the hedging interpretation as investors seek protection against a pullback to this zone.

Delivery volumes rose nearly 20% on 1 September compared to the five-day average, signalling increased investor participation despite the stock’s slight decline. This rise in delivery volume alongside put buying suggests that investors may be actively managing risk rather than capitulating to bearish sentiment. Does the delivery volume increase confirm a protective stance rather than outright bearishness?

Conclusion: Protective Hedging Most Likely, with Nuanced Positioning

The put option activity in Infosys Ltd ahead of the 29 September expiry reveals a nuanced picture. The ATM Rs 1,140 strike’s significant turnover and open interest suggest a mix of fresh bearish bets and protective hedging. The OTM Rs 1,120 and Rs 1,100 strikes, with their substantial open interest and turnover, lean more towards hedging or put writing strategies rather than outright bearish conviction.

The stock’s position above key short-term moving averages and the rise in delivery volumes support the interpretation that much of the put activity is protective, guarding against a moderate pullback rather than signalling a sharp decline. Put writing at the Rs 1,100 strike also indicates some bullish premium collection, reflecting confidence that the stock will hold above this level through expiry.

With mixed signals from puts and the underlying price action, should investors consider hedging their positions in Infosys or view the activity as a sign of resilience?

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