Rs 10,500 Puts Draw 4,461 Contracts on Bajaj Auto Ltd. as Stock Trades Above Strike

Put Options Event and Cash Market Context

On 1 October 2026, Bajaj Auto Ltd. saw significant put option activity ahead of the 27 October expiry. The Rs 10,500 strike led with 4,461 contracts traded, followed by Rs 10,300 (5,829 contracts) and Rs 10,400 (3,796 contracts). The underlying stock price stood at Rs 10,218, down 6.83% on the day, underperforming its sector by 1.47%. The turnover for the Rs 10,500 puts was ₹1043.14 lakhs, indicating substantial premium flow. Open interest at this strike was 707 contracts, suggesting a mix of fresh and existing positions.

The stock opened sharply lower by 4.36%, hitting an intraday low of Rs 10,351, and traded in a narrow range of Rs 49. The weighted average price skewed towards the day's low, reflecting selling pressure. Despite the decline, delivery volumes rose 31.22% over the five-day average, indicating active participation in the cash market. Is this increased delivery volume a sign of genuine selling or a technical shakeout?

Strike Price Analysis: Moneyness and Intent

The Rs 10,500 put strike sits approximately 2.7% above the current stock price of Rs 10,218, placing it in-the-money (ITM). Other active strikes such as Rs 10,300 and Rs 10,400 are also ITM or near-the-money (NTM). The Rs 9,600 strike, by contrast, is about 5.9% out-of-the-money (OTM) but saw fewer contracts (1,780) and lower open interest (346).

ITM puts typically indicate either bearish bets or protective hedging. However, given the stock's recent underperformance and the proximity of expiry, these strikes may be used by investors to shield long positions from further downside. The concentration of activity at ITM strikes suggests a defensive posture rather than speculative short selling. Are traders positioning for a pullback or simply managing risk amid volatility?

Interpreting the Put Activity: Bearish, Hedging, or Put Writing?

Put option activity can be ambiguous. The three main interpretations are directional bearish bets (put buying), hedging of existing long positions, or put writing (selling puts to collect premium, implying bullishness). For Bajaj Auto Ltd., the data points to a dominant hedging narrative.

The stock's sharp one-day decline of 6.83% contrasts with the heavy put buying at ITM strikes, which is consistent with investors protecting gains or limiting losses rather than initiating fresh bearish bets. Put writing is less likely given the high turnover and open interest build-up at ITM strikes, which typically command higher premiums and are less attractive for sellers expecting the stock to remain above these levels.

Open Interest and Contracts Analysis

The ratio of contracts traded to open interest offers insight into fresh positioning. For the Rs 10,500 strike, 4,461 contracts traded against an open interest of 707, a ratio of approximately 6.3:1. This suggests significant new activity rather than mere rollovers or position adjustments. Similarly, the Rs 10,300 strike shows 5,829 contracts traded with 769 open interest, reinforcing the idea of fresh hedging or protective buying.

Lower open interest at the Rs 9,600 strike with fewer contracts traded indicates less focus on deep OTM protection, which would be more typical of speculative bearish bets. The concentration at ITM strikes aligns with investors seeking to limit downside risk in a volatile environment.

Cash Market Context: Moving Averages and Delivery Volumes

Bajaj Auto Ltd. currently trades above its 200-day moving average but below the 5-day, 20-day, 50-day, and 100-day moving averages. This technical setup suggests the stock is in a medium-term consolidation or correction phase rather than a sustained downtrend.

The Rs 10,500 put strike roughly corresponds to a support zone just above the 200-day MA, which may explain the preference for this strike in hedging strategies. The rising delivery volumes, up 31.22% from the five-day average, indicate active participation by investors, possibly locking in profits or protecting positions amid the recent volatility. Does this technical picture favour a cautious stance or signal deeper weakness ahead?

Delivery Volume and Quality of Participation

Despite the stock's decline, delivery volumes increased to 1.98 lakh shares on 30 September, a 31.22% rise over the recent average. This suggests that the price drop was accompanied by genuine selling interest rather than purely speculative intraday moves. The combination of rising delivery volumes and heavy put buying at ITM strikes supports the view that investors are actively managing risk rather than capitulating.

Conclusion: Protective Hedging Dominates Put Activity

The heavy put option activity in Bajaj Auto Ltd. at ITM strikes, combined with the stock's recent decline and technical positioning, points primarily to protective hedging by investors rather than outright bearish bets or put writing strategies. The fresh positioning indicated by the high contracts-to-open-interest ratio reinforces this interpretation.

While the stock's underperformance and intraday weakness might suggest some caution, the elevated delivery volumes and the strike price proximity to key moving averages imply that investors are managing risk amid volatility rather than expecting a sharp collapse. Should investors consider similar protective measures or view this as a temporary correction?

Key Data at a Glance

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