Bharat Electronics Ltd Sees Heavy Put Option Activity Ahead of February Expiry

Put Option Activity Highlights

On 1 February 2026, BEL emerged as the most active stock in put options, with the 440 strike price put contracts dominating trading volumes. A total of 4,923 contracts exchanged hands, generating a turnover of approximately ₹866.39 lakhs. Open interest at this strike stands at 2,201 contracts, signalling sustained interest in downside protection or speculative bearish positioning.

The underlying stock price at the time was ₹449.75, placing the 440 strike put slightly out-of-the-money. This positioning often reflects a strategic hedge against a potential near-term price correction or increased volatility, especially given the stock’s recent volatility range between ₹435.25 (day’s low) and ₹461.65 (day’s high).

Stock Performance and Technical Context

Bharat Electronics Ltd’s share price performance on the day showed a marginal decline of 0.89%, underperforming the Sensex which was flat at 0.01%, but outperforming its sector benchmark which fell 1.16%. The stock remains robustly positioned above all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – indicating a strong underlying uptrend despite short-term profit-taking.

Investor participation has also intensified, with delivery volumes on 30 January rising by 23.03% to 2 crore shares compared to the five-day average. This heightened activity underscores growing conviction among market participants, even as some seek downside protection through put options.

Market Cap and Mojo Score Insights

Bharat Electronics Ltd is classified as a large-cap stock with a market capitalisation of ₹3,34,167 crores. The company’s Mojo Score, a proprietary metric assessing overall stock quality and momentum, stands at a strong 78.0, upgraded from a previous Hold rating to a Buy on 17 November 2025. This upgrade reflects improved fundamentals and technical outlook, reinforcing BEL’s appeal to long-term investors.

Interpreting the Put Option Surge

The heavy put option activity at the 440 strike price, expiring on 24 February 2026, suggests that traders are positioning for a potential pullback or increased volatility in the near term. This could be driven by a variety of factors including geopolitical tensions, defence budget announcements, or broader market corrections impacting the Aerospace & Defense sector.

Put options serve as a popular hedging tool for investors holding long positions in BEL, allowing them to limit downside risk while maintaining upside exposure. The open interest of 2,201 contracts at this strike price indicates that a significant number of market participants are either hedging existing holdings or speculating on a price decline.

Expiry Patterns and Investor Behaviour

Options expiry dates often bring heightened volatility as traders adjust or close positions. The 24 February expiry is particularly noteworthy given the proximity to quarterly earnings announcements and budget sessions, which historically influence defence stocks. The concentration of put contracts at a strike price just below the current market price reflects a cautious stance, balancing optimism from recent highs with prudent risk management.

Moreover, the stock’s liquidity profile supports sizeable trades, with a 2% average traded value equating to ₹33.78 crores, ensuring that both institutional and retail investors can execute sizeable option and equity trades without significant market impact.

Sector and Peer Comparison

Within the Aerospace & Defense sector, BEL’s performance remains resilient. While the sector index declined by 1.16% on the day, BEL outperformed by 0.46%, underscoring its relative strength. This outperformance, coupled with the Mojo Score upgrade, positions BEL favourably against peers, many of whom have seen more pronounced volatility and weaker technical setups.

Investors should note that the sector’s sensitivity to government policy and international developments can lead to abrupt shifts in sentiment, making option strategies particularly relevant for managing risk.

Investor Takeaways and Outlook

For investors, the current scenario presents a nuanced picture. The stock’s strong technical positioning and recent Mojo Score upgrade to Buy highlight its long-term potential. However, the surge in put option activity signals that market participants are wary of short-term headwinds and are actively managing risk.

Those holding BEL shares may consider protective put options as a prudent hedge, especially with the 24 February expiry approaching. Conversely, traders looking to capitalise on volatility could explore put buying strategies or spreads to benefit from potential price corrections.

Given the stock’s liquidity and active options market, BEL remains an attractive candidate for sophisticated option strategies that balance growth prospects with risk mitigation.

Conclusion

Bharat Electronics Ltd’s recent put option activity underscores a market environment where bullish fundamentals coexist with cautious sentiment. The stock’s ability to maintain levels above key moving averages and outperform its sector is encouraging, yet the elevated put volumes at the 440 strike price reflect prudent hedging and speculative positioning ahead of a critical expiry date.

Investors should closely monitor upcoming sector developments and earnings updates, while considering options as a strategic tool to navigate the evolving risk landscape in Aerospace & Defense equities.

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