Axis Bank Sees Heavy Put Option Activity Ahead of December Expiry

Put Option Trading Concentration and Strike Prices

Data from recent trading sessions reveals that Axis Bank's put options with strike prices of ₹1230, ₹1220, and ₹1200 have attracted the highest volumes. Specifically, the ₹1220 strike saw 3,169 contracts traded, generating a turnover of approximately ₹223.22 lakhs, accompanied by an open interest of 2,558 contracts. The ₹1200 strike recorded 2,967 contracts traded with a turnover of ₹114.04 lakhs and an open interest of 1,942 contracts. Meanwhile, the ₹1230 strike price had 2,484 contracts traded, turnover of ₹232.88 lakhs, and open interest of 2,378 contracts.

This clustering of put option activity near the current underlying value of ₹1,224.90 suggests that market participants are positioning themselves around these levels, possibly anticipating price movements or seeking downside protection.

Expiry Patterns and Market Implications

All the highlighted put options are set to expire on 30 December 2025, indicating that traders are focusing on the near-term horizon for their strategies. The expiry date coincides with the end of the calendar year, a period often marked by portfolio rebalancing and risk management adjustments. The elevated open interest across these strike prices points to sustained interest and potential volatility as the expiry approaches.

Bearish Positioning and Hedging Strategies

The prominence of put options trading, especially at strike prices close to the current market price, can be interpreted as a sign of bearish positioning or hedging activity. Investors may be seeking to protect gains or limit downside risk amid uncertain market conditions. Alternatively, some traders might be speculating on a decline in Axis Bank's share price, utilising puts as a leveraged instrument to capitalise on potential downward moves.

Axis Bank’s Recent Market Performance

On the equity front, Axis Bank has outperformed its sector by 1.35% in the latest session, registering a 0.99% gain compared to the sector’s 0.34% decline and the Sensex’s modest 0.21% rise. This performance follows a two-day period of consecutive declines, signalling a possible trend reversal. The stock’s price currently trades above its 100-day and 200-day moving averages, though it remains below the 5-day, 20-day, and 50-day averages, indicating mixed momentum signals.

Investor participation has shown a marked increase, with delivery volume on 16 December reaching 67.47 lakh shares, a rise of 323% compared to the five-day average delivery volume. This surge in delivery volume suggests heightened interest and conviction among market participants.

Liquidity metrics also support active trading, with the stock’s liquidity sufficient to accommodate trade sizes of up to ₹10.72 crore based on 2% of the five-day average traded value.

Market Capitalisation and Sector Context

Axis Bank is classified as a large-cap entity with a market capitalisation of approximately ₹3,78,609 crore. Operating within the private sector banking industry, the stock’s recent activity contrasts with the broader sector’s performance, where the sector index declined by 0.34% on the day Axis Bank gained ground. This divergence may be influencing the derivatives market’s focus on the stock, as investors weigh sectoral headwinds against company-specific factors.

Interpreting Put Option Interest in Context

Put options serve multiple purposes in the market, including hedging existing long positions, speculating on price declines, or implementing complex trading strategies. The substantial open interest and turnover in Axis Bank’s put options at strike prices near the current market value suggest that market participants are actively managing risk or expressing caution.

Given the proximity of the strike prices to the underlying value, these options are either at-the-money or slightly out-of-the-money, which typically attract higher trading volumes due to their sensitivity to price movements. The expiry date’s nearness adds urgency to these positions, as traders adjust their portfolios ahead of potential volatility spikes.

Outlook and Investor Considerations

While the put option activity signals a degree of caution or hedging, Axis Bank’s recent price action and delivery volumes indicate active investor engagement. The stock’s position relative to key moving averages suggests a nuanced technical picture, with short-term momentum lagging longer-term trends.

Investors should consider the implications of the concentrated put option interest alongside fundamental factors and broader market conditions. The upcoming expiry on 30 December 2025 may bring increased volatility, offering both risks and opportunities depending on market developments.

Overall, the derivatives market’s focus on Axis Bank underscores the importance of monitoring option chain data as part of a comprehensive investment analysis.

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