Rs 1,120 Puts — 6.7% Below Current Price — Draw 1,740 Contracts on Infosys Ltd

Put Options Event and Cash Market Context

On 29 May, Infosys Ltd saw significant put option activity concentrated around strikes Rs 1,100 to Rs 1,200, with the Rs 1,200 strike leading at 3,029 contracts traded. The total turnover for these puts exceeded ₹1.12 crores, highlighting notable interest. The expiry date for these options is 30 June 2026, providing roughly a month for the positions to play out. Meanwhile, the stock price closed at Rs 1,201.50, up 4.02% on the day and outperforming its sector by 1.38%.

This surge in put contracts comes after a six-day decline, with the stock now rebounding and trading above its 5-day and 20-day moving averages, though still below the 50-day, 100-day, and 200-day averages. Delivery volumes have dropped sharply by 55.08% compared to the five-day average, indicating lower investor participation in the rally. Is this rally lacking conviction, prompting protective hedging through puts?

Strike Price Analysis: Moneyness and Intent

The put strikes with the highest activity—Rs 1,120, Rs 1,160, and Rs 1,200—are all out-of-the-money (OTM) or at-the-money (ATM) relative to the current price. The Rs 1,120 strike is approximately 6.7% below the underlying price, while Rs 1,160 is 3.4% below, and Rs 1,200 nearly ATM at just 0.1% below. The Rs 1,100 strike, 8.5% below the current price, also saw 1,917 contracts traded.

OTM puts bought on a rising stock often indicate hedging activity, protecting gains from a recent rally. Conversely, ATM or in-the-money (ITM) puts might signal bearish bets or spread strategies. The concentration of activity at strikes just below or near the current price suggests a blend of protective hedging and cautious positioning rather than outright bearish conviction. Could this mix reflect traders balancing risk amid a technical rebound?

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

Put option activity can be ambiguous. The three primary interpretations are: directional bearish bets (put buying), hedging of existing long positions, or put writing (selling puts to collect premium, implying bullishness). In this case, the stock’s recent 4.02% gain and positioning above short-term moving averages weigh against a purely bearish reading.

The OTM nature of most put strikes and the proximity of expiry suggest that investors may be hedging against a potential pullback rather than expecting a sharp decline. The Rs 1,200 strike, with the highest contracts traded (3,029) and open interest (3,480), aligns closely with the current price, indicating active protective positioning. Put writing appears less likely given the relatively high premiums paid (turnover exceeding ₹4.46 crores at Rs 1,200 strike) and the fresh volume exceeding open interest, which points to new buying rather than selling.

Open Interest and Contracts Analysis

The ratio of contracts traded to open interest provides insight into fresh positioning. For the Rs 1,120 strike, 1,740 contracts traded against an open interest of 3,118, a ratio of approximately 0.56, indicating moderate fresh activity. The Rs 1,200 strike shows 3,029 contracts traded versus 3,480 open interest, a ratio near 0.87, suggesting significant new positions being established or rolled over.

These figures imply that the put activity is not merely adjustments of existing positions but includes fresh buying, consistent with hedging or cautious bearish bets. The open interest concentration near the current price also supports the view that traders are positioning for potential near-term volatility rather than a sustained downtrend.

Cash Market Context: Technical and Volume Signals

Infosys Ltd has rebounded after six consecutive days of decline, gaining 4.02% on 29 May. The stock trades above its 5-day and 20-day moving averages but remains below longer-term averages, indicating a short-term recovery within a broader consolidation phase. The Rs 1,120 to Rs 1,200 put strikes roughly correspond to support zones near the 20-day and 50-day moving averages, consistent with protective hedging against a pullback to these levels.

Delivery volumes have fallen sharply by 55.08% compared to the five-day average, signalling that the rally is not fully backed by strong investor participation. This thinning volume may explain why investors are buying puts as insurance, guarding against a reversal in the absence of robust delivery-backed momentum. Is this cautious positioning a prudent response to a rally lacking conviction?

Delivery Volume and Market Quality

The delivery volume on 27 May was 27.25 lakh shares, down 55.08% from the five-day average, indicating reduced investor commitment during the recent rally. This decline in delivery-backed volume suggests that the price gains may be driven more by speculative or short-term trading rather than sustained buying interest. Such a backdrop often encourages hedging through put options to protect unrealised gains or limit downside risk.

Conclusion: Protective Hedging Dominates Put Activity

The put option activity in Infosys Ltd on 29 May 2026, characterised by heavy volume at strikes 6.7% to near the money below the current price, combined with a rising stock price and subdued delivery volumes, points primarily to protective hedging rather than outright bearish positioning. The fresh contracts traded relative to open interest reinforce the view of new hedging activity rather than put writing or aggressive bearish bets.

While the possibility of directional bearish bets cannot be entirely ruled out, the technical context and strike price distribution suggest that investors are seeking insurance against a potential pullback in a rally that lacks strong delivery support. Should investors consider hedging their own positions in Infosys Ltd, or does the data indicate further room for the current recovery?

Key Data at a Glance

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