Infosys Sees Heavy Put Option Activity Ahead of January Expiry Amid Bearish Sentiment

Put Option Activity Highlights

On 19 January 2026, Infosys recorded the most active put options with two strike prices drawing substantial volumes. The 1680 strike price saw 7,273 contracts traded, generating a turnover of ₹551.00 lakhs and an open interest of 7,095 contracts. Close behind, the 1660 strike price had 6,393 contracts traded, with turnover of ₹280.27 lakhs and open interest at 6,336 contracts. The underlying stock price stood at ₹1,669.40, placing these strikes just around the current market level, indicating that traders are positioning for potential downside or hedging existing long exposures.

The concentration of put option volumes near the spot price suggests that market participants are either anticipating a correction or seeking protection against volatility in the near term. The expiry date of 27 January 2026 is less than ten days away, adding urgency to these trades as investors adjust their portfolios ahead of the options expiry.

Stock Performance and Technical Context

Infosys’s stock price declined by 1.24% on the day, slightly underperforming the sector’s 1.25% fall and the broader Sensex’s 0.52% drop. This marks a reversal after three consecutive days of gains, with the stock trading within a narrow range of ₹15. Despite the recent dip, Infosys remains above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling an overall bullish trend in the medium to long term.

Investor participation has notably increased, with delivery volumes on 16 January reaching 1.07 crore shares, a 163.09% rise compared to the five-day average. This heightened activity underscores the stock’s liquidity and attractiveness for sizeable trades, supported by a 2% threshold of the five-day average traded value, enabling trade sizes up to ₹33.25 crore without impacting market depth.

Fundamental and Market Positioning

Infosys, with a market capitalisation of ₹6,84,996 crore, is a dominant player in the large-cap segment of the Computers - Software & Consulting industry. The company’s Mojo Score stands at 70.0, reflecting a positive outlook, and it was recently upgraded from a Hold to a Buy rating on 22 December 2025. This upgrade reflects improved fundamentals and investor confidence, despite the short-term bearish option activity.

Interpreting the Put Option Surge

The heavy put option volumes at strike prices 1660 and 1680, both close to the current market price, indicate a cautious stance among traders. Put options serve as insurance against price declines or as speculative bets on downward movement. The open interest figures suggest that these positions are not merely intraday trades but represent sustained bearish bets or hedges.

Given the stock’s recent trend reversal and the sector’s underperformance, investors may be bracing for volatility or a correction in Infosys shares. However, the stock’s strong technical positioning above multiple moving averages and the recent upgrade to a Buy rating imply that any downside could be limited or short-lived.

Expiry Patterns and Market Implications

The 27 January 2026 expiry is a critical date for options traders, as positions will be squared off or rolled over. The clustering of put options near the current price suggests that traders are actively managing risk ahead of this expiry. Should the stock price fall below these strike prices, put holders stand to gain, potentially accelerating downward momentum. Conversely, if the stock holds above these levels, put sellers may benefit, reducing implied volatility.

Market participants should monitor open interest changes and volume trends in the coming sessions to gauge shifts in sentiment. The interplay between put and call option activity will provide further clues on directional bias and hedging strategies.

Sector and Broader Market Context

Infosys’s performance is closely tied to the Computers - Software & Consulting sector, which has seen a 1.25% decline on the day, slightly worse than the Sensex’s 0.52% fall. This sectoral weakness may be influencing the increased put option activity as investors hedge against sector-specific risks such as global IT spending uncertainties, currency fluctuations, and geopolitical tensions impacting outsourcing demand.

Despite these headwinds, Infosys’s large-cap status and strong fundamentals provide a degree of resilience. The recent Mojo Grade upgrade from Hold to Buy reflects improved earnings prospects and operational execution, factors that may limit downside risk in the medium term.

Investor Takeaway

For investors, the surge in put option activity at strike prices near the current market level is a signal to closely monitor Infosys’s price action in the coming days. While the stock’s technical and fundamental backdrop remains robust, the short-term bearish positioning suggests caution. Hedging strategies may be prudent for those with significant exposure, especially given the impending options expiry.

Long-term investors should weigh the recent upgrade and strong fundamentals against the sectoral pressures and market volatility. The stock’s liquidity and rising investor participation provide ample opportunity for tactical adjustments without significant market impact.

Conclusion

Infosys Ltd’s heavy put option trading ahead of the 27 January 2026 expiry reflects a nuanced market outlook combining cautious short-term sentiment with confidence in the company’s underlying strength. The elevated open interest and turnover at strike prices 1660 and 1680 highlight active risk management and speculative positioning. Investors should remain vigilant to price movements and option market signals as the expiry approaches, balancing the stock’s solid fundamentals against potential near-term volatility.

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