Rs 1,020 Puts Draw Over 3,000 Contracts as Infosys Ltd Trades Above Strike

Put Options Event and Cash Market Context

On 27 Jul 2026, Infosys Ltd saw significant put option turnover ahead of the 28 Jul expiry. The Rs 1,020 strike put led with 3,061 contracts traded, followed closely by Rs 1,000 puts with 3,347 contracts and Rs 1,030 puts with 3,517 contracts. The total turnover for these strikes ranged from ₹3.6 lakhs to ₹9.9 lakhs, reflecting active participation. The underlying stock price at Rs 1,074.30 was above all these strikes, indicating these puts were out-of-the-money (OTM).

This activity coincided with a 3.22% rise in the stock price on the day, outperforming the IT - Software sector's 2.27% gain and the Sensex's 0.76% advance. The stock also opened with a 2.32% gap up and touched an intraday high of Rs 1,077.50, signalling positive momentum. Is this put activity a sign of hedging or a bearish stance?

Strike Price Analysis: Moneyness and Distance

The Rs 1,020 strike sits approximately 5.0% below the current market price, while the Rs 1,000 strike is nearly 7% lower. These distances place the majority of put contracts comfortably out-of-the-money. The Rs 1,045 and Rs 1,030 strikes, with 3,440 and 3,517 contracts respectively, are closer to at-the-money (ATM) but still below the spot price.

Such OTM put buying often aligns with protective hedging strategies, where investors seek downside insurance without betting on an immediate decline. The Rs 1,000 strike, with an open interest of 9,024 contracts, suggests a substantial existing position, possibly from earlier hedging or spread strategies. Conversely, the Rs 1,020 strike's open interest of 3,199 contracts, compared to 3,061 traded contracts, indicates a significant amount of fresh activity.

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

Put options inherently carry ambiguous signals. The heavy OTM put buying on Infosys Ltd amid a rising stock price suggests a protective stance rather than outright bearish conviction. Investors may be safeguarding gains after the recent rally, especially given the stock's recovery following five consecutive days of decline.

Alternatively, some of the put activity could represent put writing, where sellers collect premium expecting the stock to remain above these strikes. However, the relatively high open interest at lower strikes and the volume of contracts traded point more towards fresh hedging than aggressive put selling. The Rs 1,000 strike's large open interest may also reflect a mix of both strategies.

Less likely is a purely bearish bet, as the stock's upward momentum and the distance of the strikes below the current price would require a swift reversal to make these puts profitable. Could the options market be signalling caution rather than pessimism?

Open Interest and Contracts Analysis

The ratio of contracts traded to open interest varies across strikes. For the Rs 1,020 strike, 3,061 contracts traded against 3,199 open interest, indicating mostly fresh positioning. The Rs 1,000 strike saw 3,347 contracts traded versus 9,024 open interest, suggesting a mix of new trades and existing positions. The Rs 1,030 strike had 3,517 contracts traded against 5,823 open interest, also reflecting active adjustments.

This pattern points to a dynamic options market where participants are both initiating and adjusting hedges or spreads. The fresh activity at OTM strikes supports the interpretation of protective hedging rather than directional bearishness or aggressive put writing.

Cash Market Context: Moving Averages and Delivery Volumes

Infosys Ltd currently trades above its 5-day and 20-day moving averages but remains below the 50-day, 100-day, and 200-day averages. This positioning suggests short-term strength within a longer-term consolidation phase. The Rs 1,020 put strike aligns roughly with a support zone below the 50-day moving average, consistent with a technical hedge against a pullback to this level.

Delivery volumes on 24 Jul surged by 228.53% to 1.81 crore shares compared to the 5-day average, indicating rising investor participation. However, the rally on 27 Jul was accompanied by a 36.21% decline in delivery volumes, hinting at a lack of conviction behind the price rise. This divergence may explain why investors are seeking downside protection through puts — should investors be cautious despite the rally?

Key Data at a Glance

Conclusion: Protective Hedging Dominates Put Activity

The put option activity in Infosys Ltd on 27 Jul 2026 is best interpreted as a protective hedge rather than a directional bearish bet. The OTM strikes with heavy contracts traded, combined with the stock's recent gains and positioning above short-term moving averages, support this view. The large open interest at lower strikes may reflect a blend of existing hedges and some put writing, but fresh activity at Rs 1,020 strike points to downside insurance.

Given the mixed signals from delivery volumes and the technical setup, investors appear cautious, seeking to guard against a pullback rather than expecting a sharp decline. Should investors consider similar protective strategies or view the rally as sustainable?

Options trading involves risk and is not suitable for all investors. The interpretations presented are based on available data and do not constitute investment advice.

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