Infosys Sees Heavy Put Option Activity Amid Bullish Price Momentum

Strong Price Performance Contrasts Put Option Activity

On 3 February 2026, Infosys outperformed its sector peers with a 2.09% gain, opening the day with a significant 6% gap up. The stock touched an intraday high of ₹1,728, marking a 6.05% increase from the previous close. This bullish momentum is further supported by the stock trading above all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day marks, signalling sustained upward strength.

The IT - Software sector itself gained 2.11% on the day, with Infosys slightly outperforming the sector by 0.45%. The Sensex also rose by 2.56%, indicating a broadly positive market environment. However, delivery volumes tell a different story, with a 14.13% decline in investor participation compared to the five-day average, suggesting some caution among long-term holders despite the price rally.

Put Option Activity Highlights Bearish Hedging and Speculation

Contrary to the bullish price action, put options on Infosys have seen heavy trading volumes, particularly at the ₹1,680 strike price expiring on 24 February 2026. A total of 2,989 contracts changed hands, generating a turnover of ₹354.02 lakhs. Open interest at this strike stands at 1,245 contracts, indicating significant outstanding bearish bets or hedges.

The underlying stock price at ₹1,668.7 is just below the ₹1,680 strike, suggesting that traders are positioning for potential downside protection or speculative plays in the near term. The concentration of put activity at this strike price, close to the current market level, often reflects a cautious stance by institutional investors or traders anticipating volatility or a correction.

Market Cap and Mojo Score Reflect Strong Fundamentals

Infosys commands a large market capitalisation of ₹6,60,507 crores, underscoring its status as a heavyweight in the Indian IT sector. The company’s Mojo Score stands at a healthy 70.0, with a recent upgrade from Hold to Buy on 22 December 2025. This upgrade reflects improved fundamentals and positive outlooks from MarketsMOJO analysts, who have also assigned a Market Cap Grade of 1, indicating top-tier market capitalisation quality.

Such fundamental strength often attracts both bullish investors and cautious hedgers, explaining the coexistence of rising stock prices and elevated put option activity. The latter may serve as insurance against sudden market reversals or sector-specific headwinds.

Expiry Patterns and Investor Sentiment

The 24 February 2026 expiry date is attracting significant attention in the options market, with put contracts dominating the activity for Infosys. This expiry is less than three weeks away, which often leads to heightened volatility as traders adjust positions ahead of the deadline.

Put options serve multiple purposes: they can be used as outright bearish bets, hedges against long stock holdings, or tools for complex option strategies. The elevated open interest and turnover at the ₹1,680 strike suggest that many investors are either protecting gains or speculating on a near-term pullback despite the current uptrend.

Interestingly, the stock’s liquidity supports sizeable trades, with a 2% threshold of the five-day average traded value allowing for trade sizes up to ₹24.7 crores. This liquidity ensures that large institutional players can execute hedging strategies without significant market impact.

Sector and Market Context

Within the Computers - Software & Consulting sector, Infosys remains a bellwether stock. Its recent outperformance relative to the sector and Sensex highlights its resilience amid broader market fluctuations. However, the falling delivery volumes indicate some profit-booking or cautious repositioning by investors, which may explain the surge in put option interest.

Given the sector’s 2.11% gain on the day, the mixed signals from derivatives and cash markets suggest a nuanced outlook. Investors may be balancing optimism about the company’s growth prospects with concerns over valuation or macroeconomic uncertainties.

Investor Takeaways and Outlook

For investors, the current scenario presents a dual narrative. On one hand, Infosys’s strong price momentum and upgraded Mojo Grade to Buy signal confidence in the company’s medium-term prospects. On the other, the heavy put option activity near the current price level suggests that market participants are wary of potential near-term volatility or corrections.

Those holding long positions may consider the put option surge as a reminder to evaluate risk management strategies, including protective puts or stop-loss orders. Conversely, traders looking for opportunities might view the elevated put interest as a contrarian indicator, signalling that downside risks could be limited given the underlying bullish trend.

Overall, Infosys remains a key stock to watch within the IT sector, with its large market cap and liquidity making it a focal point for both fundamental and derivative market participants.

Technical and Fundamental Alignment

The alignment of technical indicators with fundamental upgrades strengthens the investment case for Infosys. The stock’s position above all major moving averages confirms a sustained uptrend, while the Mojo Score upgrade from Hold to Buy on 22 December 2025 reflects improved earnings visibility and sector positioning.

However, the put option activity highlights the importance of monitoring derivative markets as a barometer of investor sentiment and potential risk. The ₹1,680 strike price, close to the current market price, acts as a critical level to watch in the coming weeks, especially as the 24 February expiry approaches.

Conclusion

Infosys Ltd’s recent market behaviour illustrates the complex dynamics between bullish price action and bearish derivative positioning. While the stock continues to rally and outperform its sector, the surge in put option trading at near-the-money strikes signals a cautious undercurrent among investors. This duality underscores the need for a balanced approach, combining fundamental conviction with prudent risk management as the February expiry nears.

Investors should closely monitor open interest trends, delivery volumes, and price movements to gauge the evolving sentiment and adjust their portfolios accordingly. Given Infosys’s large-cap stature and liquidity, it remains a pivotal stock for both long-term investors and traders navigating the Indian IT sector’s opportunities and challenges.

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