Infosys Sees Heavy Put Option Activity Ahead of January Expiry

Put Option Surge Signals Caution

On 21 January 2026, Infosys recorded the most active put options with 5,432 contracts traded at the ₹1,640 strike price, generating a turnover of ₹21.49 crores. Open interest stands at 2,215 contracts, indicating sustained interest in downside protection or speculative bearish bets. The underlying stock price hovered at ₹1,640.5, almost exactly at the strike price, suggesting that traders are positioning for potential volatility or a downside move in the near term.

This heightened put activity contrasts with Infosys’s recent technical strength, as the stock trades above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. However, the stock has experienced a three-day consecutive decline, losing 2.76% over this period, signalling some short-term pressure.

Market Context and Sector Comparison

Infosys’s 1-day return of -1.14% slightly underperformed the sector’s -1.00% and the Sensex’s marginal -0.16% decline on the same day. This relative underperformance, coupled with falling investor participation—delivery volume on 20 January was 36.02 lakh shares, down 34% from the five-day average—suggests cautious sentiment among shareholders. Despite this, liquidity remains robust, with the stock capable of handling trade sizes up to ₹32.07 crores based on 2% of the five-day average traded value.

Fundamental and Rating Update

MarketsMOJO upgraded Infosys from Hold to Buy on 22 December 2025, reflecting improved fundamentals and positive outlook. The company holds a strong Mojo Score of 70.0, supported by a Market Cap Grade of 1, underscoring its large-cap status with a market capitalisation of ₹6,72,143 crores. This upgrade signals confidence in the company’s earnings growth and sector positioning despite recent price softness.

Expiry Patterns and Strike Price Analysis

The put options expiring on 27 January 2026 have attracted the most attention, with the ₹1,640 strike price being the focal point. This strike is effectively at-the-money, given the underlying’s current price, making it a critical level for traders hedging against downside risk or speculating on a near-term correction. The open interest of 2,215 contracts at this strike suggests that a significant number of investors are either protecting long positions or positioning for a potential drop below this level.

Such activity often precedes heightened volatility around expiry dates, as traders adjust their positions. The concentration of put contracts at this strike price may also indicate a psychological support level, where investors expect the stock to find buying interest if it dips below ₹1,640.

Bearish Positioning and Hedging Strategies

The surge in put option volume can be interpreted as a sign of increased bearish sentiment or prudent hedging by institutional investors. Given Infosys’s recent three-day decline and the slight underperformance relative to the sector, some investors may be seeking downside protection amid broader market uncertainties.

Hedging through puts allows investors to limit losses if the stock price falls, while still maintaining exposure to potential upside. The sizeable turnover of ₹21.49 crores in put options reflects active risk management and speculative interest, signalling that market participants are bracing for possible near-term volatility despite the company’s strong fundamentals.

Technical Strength Versus Short-Term Weakness

While the technical indicators remain positive with the stock trading above all major moving averages, the recent dip and falling delivery volumes suggest a temporary pullback. This divergence between technical strength and short-term price weakness is often a hallmark of consolidation phases before a decisive move.

Investors should monitor the stock’s behaviour around the ₹1,640 level closely, as a sustained break below could trigger further downside, while a rebound may reaffirm the bullish upgrade and underlying strength.

Investor Takeaways and Outlook

Infosys’s current put option activity highlights a cautious stance among traders despite the company’s strong fundamentals and recent upgrade. The stock’s large market capitalisation and sector leadership make it a key bellwether for the IT software and consulting industry. Investors should weigh the technical resilience against the short-term bearish signals from option market dynamics.

Those holding long positions may consider protective strategies such as buying puts or tightening stop-loss levels around the ₹1,640 mark. Conversely, contrarian investors might view the current dip and elevated put interest as a potential entry point, anticipating a rebound supported by the company’s robust earnings prospects and positive mojo rating.

Overall, the interplay between strong fundamentals and active put option trading suggests a nuanced market view, where risk management is paramount amid evolving market conditions.

Sector and Market Implications

The Computers - Software & Consulting sector has been under pressure recently, with Infosys’s performance broadly inline with sector returns. The slight underperformance relative to the Sensex indicates sector-specific headwinds, possibly linked to global IT spending concerns or currency fluctuations impacting earnings.

Investors should monitor broader sector trends alongside Infosys’s price action and option market signals to gauge the sustainability of the current correction or the potential for renewed momentum.

Conclusion

Infosys Ltd’s heavy put option activity ahead of the 27 January expiry reflects a market balancing act between confidence in the company’s long-term prospects and caution over near-term volatility. The ₹1,640 strike price has emerged as a critical level for both hedgers and speculators, underscoring the importance of this price point in upcoming trading sessions.

With a strong Mojo Score of 70.0 and a recent upgrade to Buy, Infosys remains a compelling large-cap stock, but investors should remain vigilant to technical signals and option market dynamics as they navigate the evolving landscape.

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