Aurobindo Pharma Sees Surge in Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

On 18 February 2026, Aurobindo Pharma’s put options with a strike price of ₹1100 expiring on 24 February 2026 recorded the highest volume of contracts traded, totalling 6,072 contracts. This translated into a turnover of approximately ₹369.36 lakhs, reflecting substantial investor interest in downside protection. Open interest for these puts stands at 2,174 contracts, indicating that a sizeable number of positions remain open, potentially signalling ongoing bearish sentiment or hedging strategies.

The underlying stock price at the time was ₹1,143.80, placing the ₹1100 strike price slightly out-of-the-money. This positioning suggests that traders are bracing for a possible near-term decline below this level, or are actively hedging existing long positions against downside risk.

Stock Performance and Market Context

Aurobindo Pharma’s stock price has recently shown signs of weakness, falling by 3.34% on the day, which notably underperformed the Pharmaceuticals & Biotechnology sector’s marginal decline of 0.12% and the Sensex’s 0.23% drop. The stock touched an intraday low of ₹1,129.20, down 4.85%, with heavier volume traded near this low, indicating selling pressure.

Technical indicators reveal a mixed picture. The stock remains above its 200-day moving average, a long-term bullish signal, but trades below its 5-day, 20-day, 50-day, and 100-day moving averages, suggesting short- to medium-term weakness. Rising investor participation is evident, with delivery volumes on 17 February reaching 15.49 lakh shares, a 5.66% increase over the five-day average, signalling heightened trading activity and possibly increased institutional involvement.

Liquidity remains adequate, with the stock’s traded value supporting trade sizes up to ₹5.51 crore based on 2% of the five-day average traded value, ensuring that option and stock trades can be executed without significant market impact.

Investor Sentiment and Strategic Implications

The surge in put option volume at the ₹1100 strike price, combined with the stock’s recent price weakness, suggests that investors are increasingly cautious about Aurobindo Pharma’s near-term prospects. The pharmaceutical sector has faced headwinds from regulatory scrutiny and pricing pressures, which may be contributing to the cautious stance.

Market participants may be using put options either as outright bearish bets or as hedges against existing long stock positions. The open interest data supports the view that these are not merely speculative trades but part of broader risk management strategies.

Given the stock’s current Mojo Score of 58.0 and a Hold grade, downgraded from Buy on 1 December 2025, the market appears to be reassessing the company’s growth and risk profile. The mid-cap pharmaceutical firm, with a market capitalisation of ₹68,709 crore, is navigating a challenging environment that warrants close monitoring by investors.

Expiry Patterns and Market Impact

The 24 February 2026 expiry date is critical, as the concentration of put options at the ₹1100 strike price may influence price dynamics in the coming days. Option writers and holders often adjust their positions as expiry approaches, which can lead to increased volatility around key strike prices.

Traders should watch for potential support or resistance near ₹1100, as the unwinding or rolling over of these put positions could impact the stock’s price trajectory. Additionally, the interplay between option expiry and underlying stock movements may present trading opportunities or risks for both short-term and long-term investors.

Comparative Analysis and Outlook

When compared with its sector peers, Aurobindo Pharma’s recent underperformance and increased bearish option activity stand out. While the Pharmaceuticals & Biotechnology sector has largely remained stable, the stock’s 4.14% day decline and negative momentum highlight company-specific challenges.

Investors should consider the company’s fundamentals alongside technical signals. The downgrade from Buy to Hold by MarketsMOJO on 1 December 2025 reflects tempered expectations, possibly due to margin pressures or regulatory risks. The company’s market cap grade of 2 indicates mid-cap status, which often entails higher volatility relative to large-cap peers.

Given these factors, cautious investors may prefer to monitor the stock closely or explore alternative pharmaceutical stocks with stronger momentum or more favourable risk profiles. The current option market activity serves as a useful barometer of sentiment and potential price action in the near term.

Conclusion

Aurobindo Pharma Ltd.’s elevated put option volumes at the ₹1100 strike price ahead of the 24 February expiry underscore a growing bearish sentiment or hedging demand among market participants. Coupled with recent price declines and a Hold rating, the stock faces a challenging environment that warrants careful analysis.

Investors should weigh the implications of option market signals alongside fundamental and technical factors before making portfolio decisions. The evolving landscape in the pharmaceutical sector and company-specific developments will be key drivers of Aurobindo Pharma’s stock performance in the coming weeks.

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