Heavy Put Option Volumes Highlight Investor Caution
On 21 July 2026, Bajaj Auto emerged as one of the most actively traded stocks in the put options segment, with two strike prices drawing significant attention. The 10,500 strike put option recorded 11,809 contracts traded, generating a turnover of ₹1550.99 lakhs, while the 10,000 strike saw 8,889 contracts traded with a turnover of ₹218.07 lakhs. Open interest stood at 2,424 and 2,513 contracts respectively for these strikes, indicating sustained interest and potential accumulation of bearish bets or protective hedges.
These strike prices are particularly relevant given the underlying stock price of ₹10,497 at close, positioning the 10,500 strike slightly out-of-the-money and the 10,000 strike in-the-money. The concentration of put activity near the current market price suggests investors are bracing for possible downside or volatility in the near term.
Expiry Patterns and Market Context
The expiry date of 28 July 2026 is less than a week away, intensifying the focus on these put options. The surge in put contracts ahead of expiry often reflects hedging strategies by institutional investors or speculative bearish bets by traders anticipating a correction or profit-taking phase.
Despite this, Bajaj Auto’s stock remains resilient, trading just 3.24% below its 52-week high of ₹10,834. The stock outperformed its sector by 0.31% on the day, even though it declined by 0.27%, compared to the sector’s 0.59% fall and the Sensex’s 0.21% dip. This relative outperformance amid broader market weakness adds nuance to the bearish sentiment implied by put option volumes.
Technical Indicators and Investor Participation
Technically, Bajaj Auto is trading above all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling an overall bullish trend. However, the stock has fallen after four consecutive days of gains, which may have prompted some investors to initiate protective puts or lock in profits.
Investor participation appears to be waning, with delivery volume on 20 July dropping by nearly 50% to 2.01 lakh shares compared to the five-day average. This decline in delivery volume suggests reduced conviction among buyers, potentially contributing to the increased demand for downside protection through put options.
Market Capitalisation and Quality Assessment
Bajaj Auto is classified as a large-cap stock with a market capitalisation of ₹2,88,953 crores, underscoring its significance in the automobile sector. The company holds a Mojo Score of 72.0 with a current Mojo Grade of Buy, recently downgraded from Strong Buy on 20 July 2026. This adjustment reflects a cautious stance by analysts, possibly influenced by the recent uptick in put option activity and the stock’s short-term price action.
Implications for Investors and Traders
The heightened put option activity at strike prices close to the current market level suggests that investors are either hedging existing long positions or speculating on a near-term correction. Given the stock’s proximity to its 52-week high and the recent trend reversal, this cautious positioning is understandable.
For traders, the liquidity of Bajaj Auto remains robust, with the stock’s traded value supporting sizeable trade sizes up to ₹10.53 crores based on 2% of the five-day average traded value. This liquidity facilitates active options trading and efficient price discovery.
Investors should monitor the expiry on 28 July closely, as the resolution of these put positions could influence the stock’s price trajectory in the coming days. A sustained breach below the 10,000 level could trigger further downside, while a rebound above key moving averages may alleviate bearish pressures.
Conclusion: Balanced Outlook Amid Mixed Signals
While Bajaj Auto’s fundamentals and technicals remain largely positive, the surge in put option volumes signals a degree of caution among market participants. The downgrade from Strong Buy to Buy and the falling delivery volumes reinforce this tempered outlook. Investors would be well advised to consider these factors in their portfolio strategies, balancing the stock’s long-term growth prospects against near-term volatility risks.
