Rs 1,100 Puts — 1.9% Below Current Price — Draw 4,577 Contracts on Infosys Ltd

Put Options Event and Cash Market Context

On 18 Aug 2026, Infosys Ltd saw 4,577 put contracts traded at the Rs 1,100 strike, with a turnover of approximately ₹176.67 lakhs. Additionally, the Rs 1,120 strike put contracts recorded even heavier activity, with 6,214 contracts traded and turnover exceeding ₹405 lakhs. The open interest at Rs 1,100 stands at 10,541 contracts, while Rs 1,120 strike puts have an OI of 5,278, indicating a substantial build-up of positions ahead of the 25 Aug 2026 expiry.

The stock price has been under pressure, falling 1.64% on the day and down 5.86% over the past five sessions. Despite this, it remains above its 50-day moving average but below shorter and longer-term averages, suggesting a mixed technical picture. Delivery volumes have declined by over 32% compared to the five-day average, hinting at reduced investor participation in the cash market — does this thinning delivery volume explain the surge in put activity?

Strike Price Analysis: Moneyness and Intent

The Rs 1,100 strike sits roughly 1.9% below the current market price of Rs 1,120.70, placing it slightly out-of-the-money (OTM). The Rs 1,120 strike is effectively at-the-money (ATM), matching the underlying price closely. This proximity to the current price is critical in interpreting the put activity. OTM puts near the money often serve as protective hedges against a modest pullback, while ATM puts can indicate more directional bearish bets.

Given the stock's recent decline, the ATM Rs 1,120 puts may reflect investors seeking downside protection or outright bearish positioning. Conversely, the OTM Rs 1,100 puts could be part of a hedging strategy to guard against further falls without committing to a full bearish stance — is this a case of cautious protection or a bet on deeper weakness?

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

Put options inherently carry ambiguous signals. The heavy volume at Rs 1,100 and Rs 1,120 strikes could represent three scenarios: first, put buying as a bearish bet anticipating further declines; second, hedging by long stockholders protecting gains or limiting losses; third, put writing, where sellers collect premium expecting the stock to hold above these strikes.

Given the stock's recent five-day fall of nearly 6%, the ATM put activity at Rs 1,120 aligns with a defensive stance or bearish positioning. However, the Rs 1,100 strike's OTM status and higher open interest suggest a protective hedge rather than aggressive bearishness. The absence of a sharp price drop below Rs 1,100 and the stock's position above the 50-day moving average support this interpretation. Put writing appears less likely here, as the turnover and open interest indicate active buying rather than premium collection.

Open Interest and Contracts: Fresh Positioning or Adjustments?

The ratio of contracts traded to open interest at Rs 1,100 is approximately 0.43 (4,577 contracts traded vs 10,541 OI), indicating a significant but not overwhelming fresh activity. At Rs 1,120, the ratio is higher at 1.18, suggesting more recent positioning or adjustments. This pattern points to a mix of new protective positions and some rolling or closing of existing ones. The sizeable open interest at Rs 1,100 also hints at a base of investors maintaining downside protection over the coming week.

Cash Market Momentum and Technical Alignment

Infosys Ltd has been trending lower over the past week but remains above its 50-day moving average, a key technical support level. The stock is below its 5-day, 20-day, 100-day, and 200-day moving averages, reflecting short-term weakness amid longer-term consolidation. The Rs 1,100 put strike roughly corresponds to a support zone just below the 50-day MA, consistent with a hedging strategy to protect against a pullback to this level rather than a bet on a sharp collapse.

Delivery volumes have fallen by 32.41% compared to the recent average, suggesting that the rally or decline lacks strong conviction from investors physically holding shares. This thinning participation may be prompting investors to seek protection through options rather than outright selling — should investors interpret this as a cautious stance amid uncertain momentum?

Delivery Volume and Market Participation

The delivery volume on 17 Aug was 30.82 lakh shares, down 32.41% from the five-day average, indicating reduced physical market participation. This decline in delivery-backed trading suggests that the recent price moves may not be fully supported by long-term holders. In such environments, options become a preferred tool for managing risk, which aligns with the observed put buying activity. The stock's high dividend yield of 4.27% at the current price adds a layer of income appeal, potentially encouraging investors to hedge rather than exit positions outright.

Conclusion: Protective Hedging Dominates Put Activity

The combined data from the options and cash markets suggests that the heavy put activity in Infosys Ltd is primarily driven by protective hedging rather than outright bearish bets or put writing. The proximity of the Rs 1,100 and Rs 1,120 strikes to the current price, the stock’s position relative to key moving averages, and the recent price decline all point to investors seeking downside protection amid short-term weakness.

While the ATM put volume at Rs 1,120 could indicate some bearish conviction, the larger open interest and turnover at the slightly OTM Rs 1,100 strike align better with a cautious stance to guard against a pullback to technical support. The diminished delivery volumes reinforce the notion that investors are managing risk through options rather than selling shares outright — should investors consider similar protective strategies or view this as a signal of deeper weakness?

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