Rs 1,050 Puts — 0.6% Above Current Price — Draw 3,723 Contracts on Infosys Ltd

Put Options Event and Cash Market Context

On 23 Jul 2026, Infosys Ltd saw significant put option turnover, with 3,723 contracts traded at the Rs 1,050 strike and 6,002 contracts at Rs 1,040. The total turnover for these strikes was ₹425.6 lakhs and ₹584.6 lakhs respectively, indicating substantial premium flow. Open interest at Rs 1,050 stands at 12,114 contracts, while Rs 1,040 holds 5,891 contracts. The stock itself has been under pressure, falling 5.25% over the past four sessions and currently trading below all major moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day.

The stock’s recent underperformance relative to its sector (-0.85% today) and the Sensex (-0.36%) adds context to the put activity — Infosys Ltd is clearly in a downtrend, but the question remains whether the put buying is purely directional or partly protective.

Strike Price Analysis: Moneyness and Intent

The Rs 1,050 strike sits approximately 0.6% above the current market price of Rs 1,044.10, making it an in-the-money (ITM) put option. The Rs 1,040 strike is slightly out-of-the-money (OTM) by about 0.4%. ITM puts typically carry higher intrinsic value and are more expensive, often signalling stronger bearish conviction or part of a spread strategy. The proximity of these strikes to the underlying price suggests that the put activity is not speculative far-OTM hedging but rather a more immediate form of protection or directional positioning.

Given the stock’s steady decline and trading below all key moving averages, the ITM and near-ATM put activity likely reflects a combination of bearish bets and hedging against further downside. The Rs 1,050 strike, in particular, aligns closely with recent support levels, which may be a focal point for traders seeking downside protection.

Infosys Ltd’s put activity raises the question: is this a protective hedge against ongoing weakness or a directional bearish bet on further declines?

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

Put options inherently carry ambiguous signals. The heavy volume at ITM and near-ATM strikes on a falling stock suggests a tilt towards bearish positioning. Traders may be buying puts to profit from or protect against further price drops. However, the sizeable open interest at these strikes also indicates that some positions may be adjustments or rollovers rather than purely fresh bearish bets.

Put writing, where traders sell puts to collect premium expecting the stock to hold above the strike, is less likely here given the stock’s downward momentum and the ITM nature of the strikes. The premium collected would be substantial, but the risk of assignment is higher in a falling market. Thus, the data points more strongly to put buying for protection or bearish speculation rather than put selling.

Open Interest and Contracts Analysis

The ratio of contracts traded to open interest is telling. At Rs 1,050, 3,723 contracts traded against an open interest of 12,114, a ratio of roughly 0.31, indicating moderate fresh activity but also significant existing positions. At Rs 1,040, 6,002 contracts traded against 5,891 open interest, a ratio exceeding 1, signalling substantial new positioning or rollovers.

This suggests that the Rs 1,040 strike is currently the focal point for fresh put buying, possibly reflecting traders’ anticipation of further downside or a desire to hedge existing long positions more aggressively. The Rs 1,050 strike, with higher open interest, may represent a mix of fresh and existing hedges or bearish bets.

Cash Market Context: Momentum and Moving Averages

Infosys Ltd has been in a clear downtrend, trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. This technical configuration supports the interpretation that put buying is largely directional bearish or protective against further declines. The stock’s delivery volume has also fallen by 9.72% against its 5-day average, signalling reduced investor participation in the sell-off, which may be prompting traders to hedge with puts.

The Rs 1,050 strike roughly corresponds to a recent support zone, which may be a natural level for protective put buyers to anchor their hedges. The combination of falling price, weak moving averages, and declining delivery volumes paints a picture of cautious positioning rather than outright panic selling.

Given this, should investors view the put activity as a warning sign or a prudent hedge amid uncertainty?

Delivery Volume and Quality of Participation

The delivery volume on 22 Jul was 43.83 lakh shares, down 9.72% from the 5-day average, indicating that the recent price decline may not be fully supported by strong investor conviction. This thinning participation often leads to increased hedging activity as longs seek protection against a potential sharper fall. The put buying at ITM and near-ATM strikes aligns with this dynamic, suggesting that traders are managing risk rather than aggressively betting on a collapse.

Conclusion: Protective Hedging Amid Downtrend

The heavy put activity on Infosys Ltd at the Rs 1,050 and Rs 1,040 strikes, combined with the stock’s sustained weakness and trading below all major moving averages, suggests that the options market is primarily positioning for continued downside risk. The ITM and near-ATM strikes indicate that this is not speculative far-OTM hedging but a more immediate form of protection or bearish speculation.

However, the reduced delivery volumes and moderate fresh open interest ratios imply that much of this activity is likely protective hedging by existing longs rather than aggressive directional short selling or put writing. The put writing scenario is less plausible given the risk profile in a falling market and the strikes involved.

Ultimately, does this put activity signal a prudent risk management strategy or a deeper conviction of further declines? The data leans towards cautious hedging amid a challenging technical backdrop rather than outright bearish capitulation.

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