Infosys Sees Heavy Put Option Activity Ahead of December Expiry

Put Option Activity and Market Context

Infosys Ltd (INFY), a leading player in the Computers - Software & Consulting sector, recorded a significant volume of put option contracts expiring on 30 December 2025. Data shows that 6,437 contracts were traded at the 1600 strike price, generating a turnover of approximately ₹509.55 lakhs. The open interest at this strike stands at 7,466 contracts, indicating sustained interest in downside protection or speculative bearish bets.

The underlying stock price at the time of this activity was ₹1,607.7, placing the 1600 strike price close to the current market level. This proximity suggests that market participants are positioning themselves for potential volatility or a price correction in the near term.

Stock Performance and Technical Indicators

Despite the heavy put option activity, Infosys has demonstrated resilience in its price movement. The stock outperformed its sector by 0.46% on the day, registering a 0.73% gain compared to the sector’s 0.21% and the Sensex’s marginal decline of 0.09%. Over the past three consecutive trading sessions, Infosys has delivered a cumulative return of 1.44%, reflecting steady buying interest.

Technical analysis reveals that Infosys is trading above its key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This positioning typically indicates a bullish trend, which contrasts with the increased put option activity, suggesting that investors may be hedging existing long positions or anticipating a near-term pullback.

Investor Participation and Liquidity Considerations

Investor participation, as measured by delivery volume, has shown a decline. On 12 December, the delivery volume was recorded at 34.51 lakh shares, which is 20.87% lower than the five-day average delivery volume. This reduction in delivery volume could imply a cautious approach by investors, possibly reflecting uncertainty or profit-booking after recent gains.

Liquidity remains adequate for sizeable trades, with the stock’s traded value supporting transactions up to ₹20.19 crore based on 2% of the five-day average traded value. This level of liquidity ensures that market participants can execute large orders without significant price impact, which is crucial for options traders managing risk or speculative positions.

Implications of Put Option Concentration at 1600 Strike

The concentration of put options at the 1600 strike price, close to the current market value, is a noteworthy development. Put options provide the right to sell shares at a predetermined price, and elevated activity at this level often signals investor caution. This could be interpreted as a hedge against potential downside risk or a speculative bet on a price decline.

Given the open interest of 7,466 contracts, the market is likely to witness increased volatility as expiry approaches. Traders holding these puts may exercise them if the stock price falls below the strike, or alternatively, close positions to realise gains or limit losses. The interplay between the underlying stock’s steady gains and the put option interest suggests a complex market sentiment balancing optimism with prudence.

Sector and Market Comparison

Infosys operates within the Computers - Software & Consulting sector, which has shown moderate gains in recent sessions. The stock’s market capitalisation stands at ₹6,62,247 crore, categorising it as a large-cap entity with significant influence on sectoral indices.

While the sector has recorded a 0.21% gain on the day, Infosys’ 0.73% rise indicates relative strength. However, the broader market, represented by the Sensex, experienced a slight decline of 0.09%, reflecting mixed investor sentiment. This divergence underscores Infosys’ role as a defensive or preferred stock within its sector amid uncertain market conditions.

Expiry Patterns and Investor Strategy

The December 2025 expiry date for the put options is a critical juncture for market participants. Expiry periods often bring heightened trading activity and price swings as traders adjust or close positions. The significant turnover of ₹509.55 lakhs in put contracts suggests active repositioning ahead of this date.

Investors may be employing these options to hedge against potential corrections after recent gains or to capitalise on anticipated volatility. The strike price selection near the current market price indicates a focus on near-the-money options, which tend to be more sensitive to price movements and time decay.

Conclusion: Balancing Optimism with Caution

Infosys’ recent trading activity presents a nuanced picture. The stock’s performance and technical indicators point to a positive trend, yet the surge in put option activity near the current price level signals a degree of caution among investors. This duality may reflect hedging strategies by long-term holders or speculative positioning anticipating short-term volatility.

Market participants should monitor the developments closely as the December expiry approaches, considering both the underlying stock’s fundamentals and the options market dynamics. The interplay between steady gains and protective put buying underscores the complexity of investor sentiment in a large-cap technology stock like Infosys.

Key Metrics at a Glance:

• Underlying stock price: ₹1,607.7


• Put option strike price: ₹1,600


• Number of put contracts traded: 6,437


• Put option turnover: ₹509.55 lakhs


• Open interest in puts: 7,466 contracts


• Market capitalisation: ₹6,62,247 crore


• Recent 3-day return: 1.44%


• Sector 1-day return: 0.21%


• Sensex 1-day return: -0.09%

Investors and traders should weigh these factors carefully when considering their exposure to Infosys, especially in the context of evolving market conditions and sectoral trends.

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