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

Put Option Activity Highlights

Data from the derivatives market reveals that Bharat Electronics Ltd’s put options have emerged as the most actively traded contracts among large-cap stocks in the Aerospace & Defence sector. The three most traded put strikes expiring on 24 February 2026 are Rs 430, Rs 420, and Rs 400, with respective contract volumes of 2,463, 1,970, and 2,136. The underlying stock price currently stands at Rs 427.6, placing the Rs 430 and Rs 420 strikes close to the money, while Rs 400 represents a moderately out-of-the-money hedge.

Turnover figures further underscore the intensity of this activity. The Rs 430 strike recorded a turnover of approximately ₹525.41 lakhs, the Rs 420 strike ₹296.45 lakhs, and the Rs 400 strike ₹152.19 lakhs. Open interest (OI) data corroborates this trend, with the Rs 400 strike leading at 3,995 contracts, followed by Rs 420 at 3,425 and Rs 430 at 1,893. The elevated OI at these strikes suggests sustained bearish bets or protective hedging positions held by market participants.

Interpreting the Bearish Positioning

The concentration of put option activity near and slightly below the current market price indicates that investors are positioning for potential downside or seeking insurance against volatility. The Rs 400 strike, with the highest open interest, acts as a psychological support level where traders expect the stock might find a floor or where hedgers aim to limit losses.

Such put-heavy activity often reflects a cautious outlook, especially in sectors like Aerospace & Defence, which can be sensitive to geopolitical developments, government spending patterns, and global defence contracts. While the stock has shown resilience, trading above its 20-day, 50-day, 100-day, and 200-day moving averages, the recent dip below the 5-day moving average and a slight day-on-day decline of 0.18% may have prompted investors to seek downside protection.

Stock Performance and Market Context

On 1 February 2026, BEL recorded a delivery volume of 2.6 crore shares, marking a 44.94% increase over its five-day average delivery volume, signalling rising investor participation. The stock touched an intraday high of Rs 438.7, a 3.14% gain, yet closed with a modest 0.59% daily return, slightly underperforming the Aerospace & Defence sector’s 0.80% gain and outperforming the Sensex’s 0.22% rise.

With a market capitalisation of ₹3,10,629 crore, Bharat Electronics Ltd remains a heavyweight in the large-cap segment. Its Mojo Score of 78.0 and recent upgrade from Hold to Buy on 17 November 2025 reflect improving fundamentals and positive analyst sentiment. However, the current option market activity suggests that investors are balancing optimism with prudence, possibly anticipating near-term volatility or sector-specific risks.

Expiry Patterns and Investor Behaviour

The 24 February 2026 expiry date is attracting significant open interest, indicating that traders are focusing on this near-term horizon for potential price movements. The clustering of put options at Rs 400, Rs 420, and Rs 430 strikes suggests that investors are hedging against a possible correction or volatility spike within the next three weeks.

Such expiry-driven activity is common in large-cap stocks where institutional investors and hedge funds use options to manage portfolio risk. The relatively high turnover and open interest in puts, compared to calls, point to a skew towards bearish sentiment or protective strategies rather than outright speculative bets.

Sectoral and Technical Considerations

Bharat Electronics Ltd operates in the Aerospace & Defence sector, which has been buoyed by government initiatives and increased defence spending. Despite these tailwinds, the sector remains vulnerable to geopolitical uncertainties and budgetary constraints, factors that may be influencing cautious positioning in the options market.

Technically, BEL’s price action shows strength above key moving averages, which typically signals a bullish trend. However, the recent dip below the 5-day moving average and the increased put option activity suggest that traders are hedging against short-term pullbacks or profit-taking.

Investors should monitor the stock’s price reaction around the Rs 420 to Rs 430 range, as this zone is critical given the concentration of open interest. A sustained move below Rs 420 could trigger further downside, while a rebound above Rs 430 may alleviate bearish pressures.

Investor Takeaway

While Bharat Electronics Ltd’s fundamentals remain robust, as reflected in its upgraded Mojo Grade to Buy and strong market capitalisation, the surge in put option activity signals a cautious stance among investors. This hedging behaviour is typical ahead of key expiry dates and may reflect concerns over short-term volatility rather than a fundamental shift.

Investors should weigh the stock’s technical strength against the bearish options positioning and monitor upcoming sector developments and geopolitical news. Those holding long positions might consider protective strategies, while opportunistic traders could watch for potential dips near the Rs 400 to Rs 420 range as entry points.

Overall, the options market activity provides valuable insight into market sentiment and risk management strategies surrounding Bharat Electronics Ltd, underscoring the importance of a balanced approach in navigating this Aerospace & Defence large-cap.

Unlock special upgrade rates for a limited period. Start Saving Now →