AU Small Finance Bank Sees Surge in Put Option Activity Amid Bearish Market Sentiment

Heavy Put Option Trading Highlights Bearish Positioning

On 23 Feb 2026, AU Small Finance Bank Ltd emerged as the most active stock in put options trading, with 3,410 contracts changing hands at the ₹950 strike price expiring the very next day. The turnover for these contracts reached ₹3.92 crores, underscoring the intensity of bearish bets or protective hedges being placed by market participants. Open interest stood at 1,307 contracts, indicating sustained interest in downside protection or speculative short positions.

The underlying stock price closed at ₹955.45, just above the ₹950 strike, suggesting that traders are positioning for a potential decline or increased volatility in the immediate term. The concentration of activity at this strike price, close to the current market price, is a classic indicator of investor caution or anticipation of downward movement.

Price Action and Market Context

AU Small Finance Bank’s stock price underperformed markedly on the day, falling 7.42% compared to a modest 0.76% gain in the Other Bank sector and a 0.64% rise in the Sensex. The stock opened with a gap down of 3.56% and touched an intraday low of ₹955.5, reflecting selling pressure throughout the session. The weighted average traded price skewed towards the day’s low, indicating that most volume was executed near the bottom end of the day’s range.

Despite the recent weakness, the stock remains above its 100-day and 200-day moving averages, though it trades below the shorter-term 5-day, 20-day, and 50-day averages. This technical setup suggests a medium-term support zone but short-term bearish momentum. Delivery volumes have also declined by 23.24% compared to the five-day average, signalling reduced investor participation amid the sell-off.

Fundamental and Market Positioning

AU Small Finance Bank Ltd, classified under the Other Bank sector, holds a market capitalisation of approximately ₹71,283.46 crores, placing it firmly in the mid-cap category. The company’s Mojo Score stands at 72.0, with a recent upgrade from Hold to Buy on 9 Feb 2026, reflecting improved fundamentals and positive outlook from MarketsMOJO’s proprietary analysis. However, the current market action and option activity suggest that investors are hedging against near-term risks despite the favourable rating.

Expiry Patterns and Implications for Investors

The expiry date of 24 Feb 2026 is critical, as the surge in put option volumes at the ₹950 strike price suggests that traders are either hedging existing long positions or speculating on a near-term correction. The open interest of 1,307 contracts indicates that these positions are not merely intraday trades but have some persistence, potentially influencing price dynamics as expiry approaches.

Such concentrated put activity often precedes increased volatility, as market makers and institutional investors adjust their hedges. For retail investors, this pattern serves as a cautionary signal to monitor the stock closely for further downside or to consider protective strategies such as stop-loss orders or option hedges.

Comparative Sector and Market Performance

While AU Small Finance Bank declined sharply, the broader Other Bank sector managed a modest gain of 0.76%, and the Sensex rose 0.64%. This divergence highlights stock-specific factors driving the bearish sentiment, possibly linked to recent earnings, asset quality concerns, or macroeconomic headwinds impacting the bank’s outlook. The stock’s liquidity remains adequate, with a 2% threshold of the five-day average traded value supporting trade sizes up to ₹4.61 crores, ensuring that investors can enter or exit positions without excessive slippage.

Technical Indicators and Investor Sentiment

Technically, the stock’s position above the long-term moving averages provides some support, but the breach of shorter-term averages and the sharp intraday decline indicate weakening momentum. The falling delivery volumes suggest that long-term holders may be stepping back, while short-term traders increase bearish bets through options.

Investors should watch for confirmation of support near the ₹950 level, as a sustained break below could trigger further downside. Conversely, a rebound above the 5-day and 20-day moving averages might alleviate some bearish pressure.

Investor Takeaway and Outlook

The pronounced put option activity in AU Small Finance Bank Ltd ahead of the 24 Feb expiry signals heightened caution among investors. While the company’s fundamentals and mid-cap status remain intact with a Buy rating from MarketsMOJO, the near-term technical and sentiment indicators point to potential volatility and downside risk.

Investors holding the stock should consider protective measures such as stop-losses or option hedges, while those looking to enter may wait for clearer signs of support or a reversal in short-term momentum. The divergence from sector and market performance emphasises the importance of stock-specific analysis in navigating current market conditions.

Overall, the combination of heavy put option volumes, price weakness, and technical signals suggests that AU Small Finance Bank Ltd is at a critical juncture, with the coming days likely to define its short-term trajectory.

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