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

Robust Put Option Volumes Highlight Investor Sentiment

On 20 January 2026, Infosys recorded the most active put options with the 1660 strike price contract seeing 5,726 contracts traded. This surge in put option volume corresponds to a turnover of approximately ₹2.02 crores (202.24 lakhs), with open interest standing at 6,078 contracts. The underlying stock price at the time was ₹1,672, placing the 1660 strike slightly out-of-the-money, which often indicates strategic hedging or speculative bearish bets ahead of the expiry date.

The concentration of activity at this strike price suggests that market participants are positioning for a potential downside move or are seeking protection against near-term volatility. The expiry date of 27 January 2026 is just a week away, intensifying the focus on these options as traders adjust their portfolios accordingly.

Stock Performance and Technical Context

Despite the heavy put option interest, Infosys has outperformed its sector by 0.6% on the day, although it has experienced a consecutive two-day decline, losing 1.04% over this period. The stock’s trading range has been relatively narrow, confined to an 11-rupee band, indicating subdued volatility in the underlying equity.

Technically, Infosys remains in a strong position, trading above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. This suggests that the broader trend remains bullish, even as short-term bearish sentiment is expressed through options activity. However, investor participation appears to be waning, with delivery volumes on 19 January falling by 46.35% compared to the five-day average, signalling cautiousness among long-term holders.

Market Capitalisation and Sectoral Positioning

Infosys commands a large market capitalisation of ₹6,78,611 crores, ranking it as a heavyweight in the Computers - Software & Consulting industry. The company’s Mojo Score of 70.0 and an upgraded Mojo Grade from Hold to Buy as of 22 December 2025 reflect improving fundamentals and positive analyst sentiment. Despite a minor day decline of 0.63%, the stock remains a preferred pick within its sector, which itself has seen a 1.08% decline on the day, while the Sensex fell 0.37%.

Put Options as a Barometer of Bearish Positioning and Hedging

The surge in put option activity at the 1660 strike price is a clear indication of market participants’ desire to hedge against potential downside risks or to speculate on a price correction. Given the stock’s current price of ₹1,672, the 1660 strike is close enough to be relevant for near-the-money hedging strategies.

Open interest of 6,078 contracts at this strike is substantial, reflecting a sizeable commitment of capital towards downside protection. This is particularly notable given the stock’s recent technical strength and the broader sector’s underperformance. Traders may be anticipating short-term volatility due to upcoming earnings announcements, macroeconomic factors, or geopolitical developments impacting the IT sector.

Liquidity and Trading Dynamics

Infosys remains highly liquid, with a delivery volume of 31.13 lakhs shares on 19 January, although this represents a sharp 46.35% decline from the five-day average delivery volume. The stock’s liquidity supports trade sizes of up to ₹32.29 crores based on 2% of the five-day average traded value, making it accessible for institutional and retail investors alike.

This liquidity profile ensures that the options market remains active and efficient, allowing for effective price discovery and risk management. The narrowing price range and the stock’s ability to hold above key moving averages suggest that while bearish sentiment is present in the options market, the underlying equity remains resilient.

Implications for Investors and Traders

The pronounced put option activity at the 1660 strike price ahead of the 27 January expiry suggests that investors are either bracing for a short-term correction or actively hedging their existing long positions. This dynamic is not uncommon in large-cap IT stocks, which often experience bouts of volatility around quarterly results or macroeconomic updates.

For long-term investors, the upgraded Mojo Grade to Buy and the stock’s strong technical positioning provide reassurance of the company’s underlying strength. However, the increased put option interest signals caution and the need to monitor near-term developments closely.

Traders may find opportunities in the options market to capitalise on volatility or to implement protective strategies. The liquidity and active trading volumes in both the stock and its options make Infosys a viable candidate for sophisticated trading approaches.

Conclusion

Infosys Ltd’s heavy put option trading activity at the 1660 strike price ahead of the January expiry highlights a nuanced market sentiment. While the stock maintains a bullish technical stance and a positive fundamental outlook, the options market reveals a layer of caution and hedging. Investors should weigh these factors carefully, balancing the company’s strong market position and upgraded ratings against the near-term risks implied by options traders.

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