Rs 1,010 Puts Draw 1,358 Contracts on Infosys Ltd Ahead of 28 July Expiry

Put Options Event and Cash Market Context

On 2 July, Infosys Ltd saw significant put option turnover, with the Rs 1,010 strike registering 1,358 contracts traded and a turnover of ₹17.83 crores. Other notable strikes included Rs 960 (1,400 contracts), Rs 980 (1,966 contracts), and Rs 950 (2,308 contracts), all expiring on 28 July 2026. The underlying stock closed at Rs 1,033.60, up 5.02% on the day, recovering after four consecutive days of decline. This rally, however, remains below key moving averages, with the stock trading lower than its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. Is this put activity a sign of protective hedging amid a tentative rally, or does it point to a more cautious outlook?

Strike Price Analysis: Moneyness and Distance from Underlying

The Rs 1,010 put strike lies approximately 2.3% below the current market price of Rs 1,033.60, placing it slightly out-of-the-money (OTM). The Rs 960 and Rs 950 strikes are further out, at roughly 7.1% and 8.1% below the underlying price respectively, while the Rs 980 strike is about 5.2% below. The Rs 1,030 strike, nearly at-the-money (ATM), is just 0.3% below the current price. This distribution of put strikes suggests a range of protective levels being considered by market participants, with a concentration around the Rs 950 to Rs 1,010 strikes.

Interpreting the Put Activity: Hedging, Bearish Positioning, or Put Writing?

Put option activity can be ambiguous, especially when the stock is in a recovery phase but remains below key technical levels. The Rs 1,010 and Rs 1,030 strikes, being close to ATM and slightly OTM, could indicate hedging by investors seeking protection against a potential pullback after recent gains. The stock's 5.02% rise on the day and the fact that it is still below major moving averages supports this view, as investors may be cautious about the sustainability of the rally.

Alternatively, the heavier volumes at the deeper OTM strikes like Rs 950 and Rs 960 could reflect speculative bearish bets, anticipating a more significant correction. However, the open interest at these strikes (2,512 and 2,315 contracts respectively) is not disproportionately high compared to the contracts traded, suggesting a mix of fresh positioning and adjustments rather than a clear directional bet.

Put writing, or selling puts to collect premium, is another possibility, especially at strikes where premiums are attractive but the stock is unlikely to fall below. The Rs 1,010 strike's turnover of ₹17.83 crores and open interest of 2,367 contracts could include such activity, implying a bullish stance by sellers confident the stock will hold above this level. Could this blend of put buying and selling be signalling a nuanced market view rather than outright bearishness?

Open Interest and Contracts Analysis

The open interest (OI) at the Rs 1,010 strike stands at 2,367 contracts, compared with 1,358 contracts traded on the day. This ratio suggests a significant portion of fresh activity, though not an overwhelming surge. The Rs 980 strike shows the highest open interest at 3,571 contracts, with 1,966 contracts traded, indicating ongoing interest at this level. The Rs 950 and Rs 960 strikes also maintain substantial OI, reflecting established positions.

These figures imply a combination of fresh hedging and position adjustments rather than a wholesale directional shift. The relatively balanced OI and volume ratios across strikes support the interpretation of a cautious market stance, blending protection with selective speculative positioning.

Cash Market Context: Technical Indicators and Delivery Volumes

Despite the 5.02% gain on 2 July, Infosys Ltd remains below all major moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day lines. This technical backdrop suggests the rally is tentative and may lack strong conviction. Delivery volumes have declined by 23.7% compared to the five-day average, indicating reduced investor participation in the recent upmove.

This combination of a rising price with subdued delivery and put activity concentrated at strikes just below the current price aligns with a protective hedging narrative. Investors appear to be safeguarding gains while remaining wary of a potential pullback to support zones near Rs 950 to Rs 1,010. Is this cautious positioning a prudent response to mixed technical signals?

Fundamental and Sector Context

Infosys Ltd operates in the Computers - Software & Consulting sector and holds a large-cap market capitalisation of ₹3,99,854 crores. The stock offers a dividend yield of 4.93%, which is attractive in the current environment. The sector has gained 2.64% on the day, while Infosys outperformed with a 5.02% rise, suggesting relative strength despite the technical challenges. This fundamental backdrop supports the view that the put activity is more likely protective hedging than outright bearish speculation.

Conclusion: Protective Hedging Dominates Put Activity

The put option activity on Infosys Ltd ahead of the 28 July expiry reveals a nuanced picture. The concentration of contracts at strikes slightly below the current price, combined with the stock's recent rally yet technical weakness, points to hedging as the primary driver. While some speculative bearish bets cannot be ruled out at deeper OTM strikes, the overall data suggests investors are seeking protection against a potential pullback rather than positioning for a sharp decline.

Put writing may also be present, reflecting confidence that the stock will hold above key support levels. The mixed open interest and turnover ratios reinforce this interpretation of balanced positioning. With the stock below major moving averages but showing signs of recovery, should investors consider hedging strategies or view the rally as a foundation for further gains?

Key Data at a Glance

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