Persistent Systems Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

On 18 February 2026, Persistent Systems recorded the most active put option contracts among its peers, with 3,740 contracts traded at the 5,500 strike price expiring on 24 February 2026. The turnover for these put options stood at ₹517.84 lakhs, indicating significant investor interest in downside protection or speculative bearish bets. Open interest remains elevated at 1,248 contracts, suggesting that traders are maintaining or building their positions rather than closing them out.

The underlying stock price was ₹5,473 at the time, slightly below the put strike price, which implies that these options are near-the-money and thus carry substantial intrinsic or time value. This positioning is consistent with a market expectation of potential further downside or at least heightened volatility in the near term.

Technical and Price Action Context

Persistent Systems has recently experienced a reversal after three consecutive days of gains, with the stock falling 2.74% on the day, underperforming its sector by 1.39%. The intraday low touched ₹5,472.5, close to the put strike price, reinforcing the significance of this level as a psychological and technical support zone.

Moreover, the stock is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a bearish trend across multiple timeframes. This technical weakness is likely contributing to the increased put option activity as investors hedge existing long positions or speculate on further declines.

Investor participation has also waned, with delivery volumes on 17 February falling by 35.5% compared to the five-day average, indicating reduced conviction among buyers. Despite this, liquidity remains adequate, with the stock able to support trade sizes of up to ₹12.9 crores based on 2% of the five-day average traded value, ensuring that option and stock trades can be executed without excessive slippage.

Fundamental and Market Positioning

Persistent Systems Ltd operates in the Computers - Software & Consulting industry and holds a market capitalisation of approximately ₹88,771 crores, categorising it as a mid-cap stock. The company’s Mojo Score currently stands at 67.0, with a Mojo Grade of Hold, reflecting a cautious stance by analysts. This is a downgrade from a previous Buy rating issued on 5 February 2026, signalling a deterioration in the stock’s outlook over recent weeks.

The downgrade aligns with the recent price weakness and technical signals, suggesting that the company may face headwinds in the near term. The Market Cap Grade is 2, indicating moderate market capitalisation relative to peers, which may influence liquidity and investor interest.

Given the sector’s overall performance, Persistent Systems’ 1-day return of -2.74% contrasts with the sector’s decline of -1.44% and the Sensex’s marginal gain of 0.03%, highlighting the stock’s relative underperformance. This divergence often attracts hedging activity as investors seek to mitigate risk in a volatile environment.

Expiry Patterns and Investor Sentiment

The expiry date of 24 February 2026 is approaching rapidly, and the concentration of put option activity at the 5,500 strike price suggests that market participants are positioning for a potential test of this level. The open interest data indicates that many investors are either hedging existing long positions or speculating on a downside move, reflecting a cautious or bearish sentiment prevailing in the market.

Such heavy put option volumes near the current trading price often act as a support zone, as option writers may hedge their short positions by buying the underlying stock, creating a complex interplay between options and spot markets. However, if the stock breaches this strike decisively, it could trigger further downside momentum.

Implications for Investors

For investors holding Persistent Systems shares, the current environment suggests heightened risk and the need for vigilance. The downgrade to Hold and the technical weakness imply that upside potential may be limited in the short term. Those with long exposure might consider protective strategies such as buying puts or tightening stop-loss levels to manage downside risk.

Conversely, speculative traders may view the heavy put activity as an opportunity to capitalise on expected volatility or a potential decline, though such strategies carry inherent risks if the stock rebounds unexpectedly.

Broader Market Context and Sector Outlook

The Computers - Software & Consulting sector has experienced mixed performance recently, with some stocks showing resilience while others, like Persistent Systems, face pressure. The sector’s 1-day return of -1.44% indicates a mild correction phase, possibly driven by profit booking or macroeconomic concerns impacting technology spending.

Persistent Systems’ relative underperformance within this sector highlights company-specific challenges or investor concerns about near-term growth prospects. The downgrade from Buy to Hold by analysts further underscores the need for cautious positioning.

Investors should monitor upcoming earnings announcements, contract wins, and broader technology sector trends to gauge whether the current bearish sentiment is justified or if a recovery is on the horizon.

Conclusion

Persistent Systems Ltd is currently at a critical juncture, with heavy put option activity signalling increased bearish sentiment and hedging ahead of the 24 February 2026 expiry. The stock’s technical weakness, downgrade in analyst rating, and relative underperformance within its sector suggest that investors should approach with caution.

While the 5,500 strike price acts as a key support level, a decisive break below this could accelerate downside momentum. Market participants are advised to closely monitor option open interest and price action for clues on the stock’s near-term direction.

Given the mixed signals and evolving market dynamics, a balanced approach combining risk management and selective opportunity identification is prudent for investors in Persistent Systems.

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