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

Heavy Put Option Volumes Highlight Investor Caution

On 4 February 2026, Infosys Ltd emerged as the most active stock in put options trading, with multiple strike prices seeing substantial contract volumes. The underlying stock closed at ₹1,557.5, but put options at strikes ranging from ₹1,480 to ₹1,600 attracted significant interest. Notably, the ₹1,560 strike price led the pack with 8,072 contracts traded, generating a turnover of ₹1241.8 lakhs and an open interest of 2,067 contracts. This was closely followed by the ₹1,540 strike with 5,291 contracts and ₹1,600 strike with 3,638 contracts traded.

The ₹1,520 and ₹1,480 strikes also saw robust activity, with 3,374 and 2,860 contracts traded respectively. The combined turnover for these strikes exceeded ₹1,200 lakhs, underscoring the scale of bearish bets or protective hedges being placed by market participants.

Expiry Patterns and Strike Price Distribution

All the put options in focus are set to expire on 24 February 2026, indicating that traders are positioning themselves for near-term downside risk or volatility. The concentration of open interest and turnover around the ₹1,560 and ₹1,540 strikes, which are close to the current market price, suggests that investors are bracing for a potential correction or are actively hedging existing long positions.

This clustering of activity near the money strikes is typical in scenarios where uncertainty prevails, and investors seek downside protection while maintaining flexibility for upside participation.

Stock Performance and Sector Context

Infosys Ltd has recently underperformed its sector, with a day’s return of -5.81% compared to the IT - Software sector’s decline of -4.92%. The stock opened sharply lower by 4.95% and touched an intraday low of ₹1,553.2, down 6.21% from the previous close. This underperformance is notable given that the broader Sensex managed a modest gain of 0.16% on the same day.

Technical indicators show the stock trading above its 100-day and 200-day moving averages, signalling long-term support, but below its 5-day, 20-day, and 50-day averages, reflecting short-term weakness. This mixed technical picture aligns with the increased put option activity, as investors weigh the stock’s medium-term fundamentals against near-term volatility risks.

Fundamental Upgrades and Market Sentiment

Despite the recent price weakness, Infosys Ltd’s Mojo Score stands at a healthy 77.0, with a recent upgrade from 'Hold' to 'Buy' on 22 December 2025. The company holds a Market Cap Grade of 1, reflecting its large-cap stature with a market capitalisation of ₹6,71,028 crores. This upgrade indicates improved fundamentals or outlook as assessed by MarketsMOJO’s proprietary scoring system.

However, the current put option surge suggests that investors remain cautious, possibly due to broader sector weakness or macroeconomic concerns impacting the IT services industry. The IT - Software sector itself declined by 4.96% on the day, indicating a challenging environment for technology stocks.

Investor Participation and Liquidity Considerations

Investor participation in Infosys shares has shown signs of moderation, with delivery volumes falling by 7.34% to 48.81 lakh shares on 3 February 2026 compared to the five-day average. This decline in delivery volume may reflect reduced conviction among long-term holders amid recent price volatility.

Nevertheless, liquidity remains robust, with the stock’s traded value supporting trade sizes up to ₹24.86 crores based on 2% of the five-day average traded value. This liquidity ensures that both institutional and retail investors can execute sizeable trades without significant market impact, which is crucial during periods of heightened option activity and hedging.

Put Options as a Hedge and Bearish Indicator

The surge in put option volumes at strikes near and slightly above the current market price is a classic sign of investors seeking downside protection. Some market participants may be using these puts to hedge existing long positions in Infosys shares, while others could be speculating on a potential price decline.

Given the stock’s recent underperformance relative to its sector and the broader market, the elevated open interest in puts at ₹1,560 and ₹1,540 strikes suggests a cautious outlook. The fact that the highest open interest is concentrated at these strikes indicates that traders expect the stock to test or breach these levels before expiry.

Outlook and Strategic Implications for Investors

For investors, the current environment calls for a balanced approach. While Infosys Ltd’s fundamentals and upgraded Mojo Grade support a positive medium-term view, the near-term technical weakness and heavy put option activity highlight risks that should not be ignored.

Those holding long positions may consider protective strategies such as buying puts or employing collars to limit downside risk. Conversely, traders with a bearish bias might find opportunities in the elevated premiums and liquidity of these put options to express their views.

Monitoring the stock’s price action relative to the key strike prices and expiry date will be critical in the coming weeks to gauge whether the bearish sentiment materialises or if the stock stabilises and resumes its upward trajectory.

Conclusion: Navigating Volatility with Informed Strategies

Infosys Ltd’s recent surge in put option activity ahead of the 24 February 2026 expiry reflects a market grappling with uncertainty in the IT sector and broader economic conditions. While the company’s upgraded fundamentals and large-cap status provide a solid foundation, the near-term technical weakness and heavy bearish positioning warrant caution.

Investors should carefully analyse the evolving price dynamics and option market signals to calibrate their exposure. Employing hedging strategies or selectively engaging in option trades could help manage risk while maintaining upside potential in this leading software and consulting stock.

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