Rs 960 and Rs 980 Puts Draw Over 18,000 Contracts on Infosys Ltd Ahead of 29-Sep Expiry

Put Options Event and Cash Market Context

The most active put strikes for Infosys Ltd on 25 September were Rs 960, Rs 980, and Rs 1,000, with 6,938, 12,160, and 7,708 contracts traded respectively. The underlying stock closed at Rs 998.40, placing the Rs 960 and Rs 980 strikes approximately 3.9% and 1.8% out-of-the-money (OTM), while the Rs 1,000 strike is just slightly in-the-money (ITM) by 0.16%. The total turnover for these puts was substantial, with Rs 69.9 lakhs at Rs 960, Rs 265.6 lakhs at Rs 980, and Rs 370.3 lakhs at Rs 1,000.

The stock has been on a downward trajectory, falling nearly 7% over the past eight sessions and trading below all major moving averages including the 5-day, 20-day, 50-day, 100-day, and 200-day. Delivery volumes have also declined by over 30% compared to the five-day average, signalling reduced investor participation in the cash market. Is this decline signalling a deeper correction or a temporary pullback?

Strike Price Analysis: Moneyness and Intent

The Rs 960 and Rs 980 put strikes being OTM suggests that buyers are positioning for a potential further decline, but not an immediate collapse. The Rs 1,000 strike, being ITM, indicates some degree of protection or bearish conviction closer to the current price. The proximity of these strikes to the underlying price is critical in interpreting the intent behind the put activity.

OTM puts at Rs 960 and Rs 980 could be purchased as a hedge against further downside, especially given the stock’s recent weakness. Conversely, the ITM Rs 1,000 puts might reflect more directional bearish bets or part of spread strategies. The expiry date of 29 September is just days away, adding urgency to these positions and suggesting traders are positioning for near-term volatility.

Given the stock’s fall and the strike distances, does this put activity reflect protective hedging or outright bearish conviction?

Interpreting the Put Activity: Multiple Perspectives

Put option activity can be ambiguous. The three main interpretations are: put buying as a bearish bet, hedging of existing long positions, or put writing (selling puts) as a bullish strategy. In this case, the stock’s sustained decline and the concentration of contracts at strikes close to the current price lean towards bearish positioning. The Rs 980 strike, with 12,160 contracts traded, stands out as a focal point for fresh bearish bets or protective hedges.

However, the sizeable open interest at Rs 1,000 (4,515 contracts) and Rs 980 (3,901 contracts) compared to the traded contracts (7,708 and 12,160 respectively) suggests a mix of fresh and existing positions. The ratio of contracts traded to open interest is roughly 1.7:1 at Rs 980 and 1.7:1 at Rs 1,000, indicating significant new activity but also ongoing adjustments to prior positions.

Put writing seems less likely here given the stock’s downward momentum and the high premiums paid, but cannot be entirely ruled out. The Rs 960 strike, being further OTM with lower open interest, may attract some put sellers expecting the stock to hold above that level, but the bulk of activity is concentrated nearer the money.

Open Interest and Contracts Analysis

The open interest figures provide insight into whether the put activity is fresh or part of ongoing positioning. The Rs 980 strike has an open interest of 3,901 contracts against 12,160 traded, indicating a large influx of new positions. Similarly, the Rs 1,000 strike’s open interest of 4,515 contracts versus 7,708 traded contracts suggests a mix of new and existing positions being adjusted.

The Rs 960 strike, with 3,019 open interest and 6,938 contracts traded, also shows fresh activity but on a smaller scale. This pattern points to active repositioning by traders, likely in response to the stock’s recent weakness and the approaching expiry.

Given the stock’s fall and the concentration of put activity near the money, is this fresh bearish conviction or protective hedging by longs?

Cash Market Context: Momentum and Moving Averages

Infosys Ltd has been under pressure, trading below all key moving averages and closing near its 52-week low, just 1.93% above the bottom at Rs 982.40. The stock’s eight-day losing streak and underperformance relative to its sector (-0.49% today) reinforce the bearish technical backdrop.

Delivery volumes have declined sharply, falling 30.68% against the five-day average, which may indicate weaker conviction among buyers. This thinning participation could be prompting longs to hedge their positions with puts, especially OTM strikes like Rs 960 and Rs 980, which offer protection against further downside without the cost of ATM puts.

The Rs 980 strike aligns roughly with a technical support zone below the 50-day moving average, suggesting that put buyers may be seeking to guard against a test of this level. Does the technical picture support a sustained decline or a near-term rebound?

Delivery Volume and Quality of Participation

The decline in delivery volume to 42.15 lakh shares on 24 September, down 30.68% from the recent average, signals reduced investor participation in the cash market. This lower delivery-backed volume amid falling prices often indicates a lack of strong conviction among sellers, which can prompt existing longs to seek downside protection through puts rather than outright selling.

This dynamic supports the interpretation that a significant portion of the put activity may be hedging rather than purely directional bearish bets. The combination of falling prices, subdued delivery volumes, and concentrated put activity near the money paints a picture of cautious positioning rather than outright capitulation.

Conclusion: Protective Hedging Dominates but Bearish Positioning Present

The heavy put option activity on Infosys Ltd ahead of the 29 September expiry reflects a complex interplay of protective hedging and bearish positioning. The concentration of contracts at Rs 960 and Rs 980 strikes, both OTM but close to the current price, combined with the stock’s sustained decline and weak delivery volumes, suggests that many longs are seeking downside protection rather than outright selling.

At the same time, the sizeable open interest and volume at the ITM Rs 1,000 strike indicate that some traders are taking directional bearish bets, anticipating further weakness. The stock’s position below all major moving averages and near its 52-week low supports this view.

Overall, the data points to a cautious market stance where hedging is the dominant theme, but bearish conviction is also present. Should investors consider this a signal to protect existing positions or a warning of deeper downside ahead?

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