Axis Bank Sees Heavy Put Option Activity Amid Mixed Market Signals

Robust Price Performance Contrasts with Elevated Put Option Interest

On 3 February 2026, Axis Bank’s shares surged to a new 52-week and all-time high of ₹1418.3, marking an intraday gain of 8.14%. The stock opened with a significant gap up of 6.98% and outperformed its private sector banking peers by 1.57%, with the sector itself gaining 2.77% on the day. This bullish price action was supported by the stock trading above all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – underscoring a strong upward trend.

Despite this positive momentum, the most active put option contract for Axis Bank was at the ₹1300 strike price, with 2,646 contracts traded and an open interest of 2,221 contracts. The turnover for these put options reached ₹13.38 crores, indicating substantial investor interest in downside protection or speculative bearish bets.

Put Option Activity: Hedging or Bearish Sentiment?

The underlying stock price at ₹1364.2 remains comfortably above the ₹1300 strike, suggesting that many investors may be utilising these puts as a hedge against potential near-term corrections rather than outright bearish speculation. The expiry date of 24 February 2026 is just over three weeks away, a timeframe that often sees increased option activity as traders position themselves ahead of quarterly results or macroeconomic events.

Open interest data reveals that the ₹1300 put strike is a focal point for traders, possibly reflecting a psychological support level. The sizeable volume and turnover in these puts, combined with the stock’s recent gains, point to a cautious approach by market participants who may be seeking to limit downside risk amid broader market uncertainties.

Market Context and Sectoral Trends

Axis Bank, a large-cap private sector bank with a market capitalisation of ₹4,07,312 crores, has recently improved its Mojo Grade from Sell to Hold as of 15 October 2025, with a current Mojo Score of 67.0. This upgrade reflects a stabilising outlook supported by solid fundamentals and technical strength. The bank’s 1-day return of 4.07% notably outpaces the Sensex’s 2.56% and the private banking sector’s 2.66% gains, highlighting its relative strength.

However, delivery volumes have declined by 43% compared to the 5-day average, signalling falling investor participation despite the price rally. This divergence may be contributing to the increased put option activity as traders hedge against potential volatility or profit-taking.

Technical Indicators and Trading Liquidity

Axis Bank’s technical setup remains robust, with the stock trading well above all major moving averages, signalling sustained bullish momentum. The weighted average price of traded volumes skewed closer to the day’s low, indicating some profit booking or cautious buying at elevated levels.

Liquidity remains ample, with the stock’s traded value supporting a trade size of approximately ₹32.04 crores based on 2% of the 5-day average traded value. This liquidity facilitates active options trading and allows institutional investors to execute sizeable hedging strategies efficiently.

Interpreting the Put Option Surge in a Broader Context

While the surge in put option volumes at the ₹1300 strike may initially appear bearish, it is important to contextualise this within the stock’s strong price performance and technical indicators. The elevated open interest and turnover in puts likely reflect a combination of hedging by long holders and speculative positioning anticipating potential short-term volatility.

Given the expiry date is less than a month away, traders may be positioning for event-driven risks such as macroeconomic data releases, RBI policy announcements, or corporate earnings updates that could impact banking stocks. The put option activity thus serves as a risk management tool rather than a definitive bearish signal.

Outlook and Investor Considerations

Investors holding Axis Bank shares should monitor the evolving options landscape closely. The current Mojo Grade of Hold suggests a neutral stance, balancing the stock’s strong technicals against potential near-term risks. The recent upgrade from Sell to Hold indicates improving fundamentals and market sentiment, but the presence of significant put option interest warrants caution.

For those seeking to manage downside risk, the ₹1300 put strike offers a natural hedge, while more aggressive traders might view the elevated put volumes as an opportunity to capitalise on volatility through options strategies. The stock’s large-cap status and sector leadership provide a solid foundation, but prudent risk management remains essential amid fluctuating market conditions.

Conclusion: Balancing Bullish Momentum with Protective Strategies

Axis Bank’s recent price rally to record highs underscores its resilience and sector leadership within private sector banking. However, the surge in put option activity at the ₹1300 strike price ahead of the 24 February expiry highlights a nuanced market sentiment where investors are actively managing risk amid optimism.

For market participants, this dynamic presents both opportunities and challenges. The stock’s strong fundamentals and technicals support a positive medium-term outlook, yet the elevated put volumes serve as a reminder to remain vigilant and consider protective measures in portfolio construction.

As the expiry date approaches, monitoring changes in open interest and volume across strike prices will be crucial to gauge shifts in market positioning and sentiment. Investors should weigh the benefits of hedging against the potential for continued upside, ensuring a balanced approach aligned with their risk tolerance and investment horizon.

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