Infosys Sees Heavy Put Option Activity Amid Bearish Hedging Ahead of Expiry

Put Option Activity Highlights

On 27 January 2026, Infosys saw 2,524 put option contracts traded at the ₹1,660 strike price, generating a turnover of approximately ₹5.25 lakhs. The open interest for these puts stands at 6,434 contracts, indicating sustained interest in downside protection or speculative bearish bets. The underlying stock price at the time was ₹1,676.6, placing the ₹1,660 strike slightly out-of-the-money, a common level for hedging near-term downside risk.

This level of put option activity is significant given the stock’s recent price action and technical positioning. While Infosys has been gaining modestly, with a 0.13% return on the day and outperforming the sector’s 0.01% gain, the put buying suggests some investors are preparing for potential volatility or a pullback in the near term.

Technical and Market Context

Infosys currently trades above its 20-day, 50-day, 100-day, and 200-day moving averages, signalling a generally bullish medium- to long-term trend. However, it remains below its 5-day moving average, hinting at short-term consolidation or weakness. The stock has been on a one-day consecutive gain streak with a slight negative return of -0.17% over that period, reflecting some hesitation among traders.

Investor participation appears to be waning, with delivery volumes falling by 17.8% compared to the five-day average, despite a still robust delivery volume of 40.07 lakh shares on 23 January. Liquidity remains healthy, with the stock able to support trade sizes of up to ₹20.76 crore based on 2% of the five-day average traded value, ensuring that option market movements are backed by sufficient underlying stock activity.

Investor Sentiment and Hedging Implications

The elevated put option volumes at the ₹1,660 strike price suggest that market participants are either hedging existing long positions or speculating on a near-term decline. Given Infosys’s large market capitalisation of ₹6,77,374 crore and its status as a sector bellwether, such activity is closely watched as a barometer of broader sentiment in the IT software and consulting space.

MarketsMOJO’s recent upgrade of Infosys’s Mojo Grade from Hold to Buy on 22 December 2025, with a strong Mojo Score of 70.0, reflects confidence in the company’s fundamentals and growth prospects. The Market Cap Grade of 1 further underscores its large-cap stability. However, the put option interest indicates that some investors remain cautious, possibly anticipating sector-specific headwinds or broader market volatility ahead of the expiry date.

Expiry Patterns and Strategic Positioning

The 27 January 2026 expiry date is a key near-term options expiry, often associated with increased volatility as traders adjust positions. The concentration of put contracts at a strike price just below the current market level is typical of protective hedging strategies, where investors seek to limit downside risk while maintaining upside exposure.

Such positioning can also be interpreted as a tactical move by institutional investors to safeguard gains after recent rallies, especially given the stock’s mixed technical signals. The relatively high open interest in these puts suggests that this is not a fleeting phenomenon but a sustained sentiment trend that could influence price action in the coming days.

Comparative Sector and Market Performance

Infosys’s 1-day return of 0.13% slightly outpaces the sector’s 0.01% gain but trails the Sensex’s 0.37% rise, indicating a moderate performance relative to benchmarks. This relative underperformance, combined with the put option activity, may reflect investor concerns about the stock’s near-term momentum despite its solid fundamentals.

Given the Computers - Software & Consulting sector’s sensitivity to global IT spending trends and currency fluctuations, the cautious stance evidenced by put buying could be a prudent risk management approach amid uncertain macroeconomic conditions.

Outlook and Investor Takeaways

While Infosys remains a fundamentally strong large-cap stock with a positive rating upgrade and robust market capitalisation, the surge in put option interest at the ₹1,660 strike price ahead of the 27 January expiry signals a nuanced market view. Investors should weigh the company’s solid medium- and long-term technicals against the short-term hedging activity that suggests potential volatility or downside risk.

For traders and portfolio managers, monitoring open interest changes and option volume patterns around key strike prices can provide valuable insights into market sentiment and positioning. The current data points to a cautious but not outright bearish stance, with put options serving as insurance rather than outright speculative bets.

In conclusion, Infosys’s option market activity highlights the importance of integrating derivatives data into equity analysis to better understand investor psychology and risk appetite in a dynamic market environment.

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