Bharat Electronics Ltd Sees Surge in Call Option Activity Ahead of February Expiry

Surge in Call Option Volumes and Strike Price Concentration

Data from the derivatives market reveals that Bharat Electronics Ltd has emerged as one of the most actively traded stocks in call options. The two most heavily traded strike prices are ₹420 and ₹430, both expiring on 24 February 2026. At the ₹420 strike, 9,500 contracts changed hands, generating a turnover of approximately ₹2,849.64 lakhs, with an open interest of 3,183 contracts. Meanwhile, the ₹430 strike saw even higher activity, with 11,600 contracts traded, turnover of ₹2,818.37 lakhs, and open interest standing at 2,816 contracts.

This concentrated activity near the current underlying value of ₹434.10 suggests that market participants are positioning for a potential upward move in BEL’s share price over the coming month. The proximity of these strike prices to the underlying price indicates a preference for near-the-money calls, reflecting a moderately bullish outlook.

Price Performance and Technical Indicators

Bharat Electronics Ltd closed just 0.77% shy of its 52-week high of ₹436, underscoring its recent strength. The stock has gained 5.34% over the past two consecutive trading days, although it marginally underperformed the Aerospace & Defence sector’s 4.86% gain on the day, with a 3.89% return compared to the sector’s 4.96%. Intraday, the stock touched a high of ₹435, representing a 4.58% increase from the previous close.

Technically, BEL is trading above all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling sustained positive momentum. However, delivery volumes have declined by 23.8% compared to the five-day average, indicating a slight drop in investor participation despite the price rally. Liquidity remains robust, with the stock capable of supporting trade sizes up to ₹17.14 crores based on 2% of the five-day average traded value.

Mojo Score and Rating Revision

MarketsMOJO assigns Bharat Electronics Ltd a Mojo Score of 65.0, categorising it as a Hold. This represents a downgrade from its previous Buy rating on 17 November 2025. The downgrade reflects a more cautious stance amid valuation concerns and sector headwinds, despite the company’s large-cap status with a market capitalisation of ₹3,08,619 crores. The Market Cap Grade remains at 1, indicating its significant size and influence within the Aerospace & Defence sector.

Investor Sentiment and Expiry Dynamics

The heavy call option volumes at strikes ₹420 and ₹430, combined with open interest figures exceeding 2,800 contracts at both levels, indicate that traders are positioning for a potential price appreciation in BEL shares by the 24 February expiry. The turnover figures, each exceeding ₹28 crore, highlight strong liquidity and active participation in these strikes.

Such activity often precedes significant price movements, as option traders hedge or speculate on directional moves. The preference for call options over puts at these strikes suggests a predominantly bullish sentiment, with investors anticipating the stock to either maintain or exceed current price levels in the near term.

Sector Context and Comparative Performance

Within the Aerospace & Defence sector, which has gained 4.86% recently, Bharat Electronics Ltd’s performance is notable but slightly lagging. The sector’s robust gains reflect broader optimism driven by government defence spending and geopolitical developments. BEL’s large-cap stature and strategic importance in defence electronics position it favourably for long-term growth, although near-term volatility and valuation pressures have tempered enthusiasm.

Compared to the Sensex’s modest 0.48% gain on the day, BEL’s 3.89% return underscores its relative strength and sector-specific momentum. However, the downgrade in Mojo Grade to Hold signals that investors should weigh the stock’s current valuation and market conditions carefully before committing fresh capital.

Outlook and Strategic Considerations for Investors

Given the current market dynamics, Bharat Electronics Ltd presents a mixed picture. The strong call option activity near the money strikes signals optimism among traders for a price rise in the short term. The stock’s technical strength, trading above all major moving averages, supports this view.

However, the downgrade to a Hold rating by MarketsMOJO and the slight underperformance relative to the sector caution investors to remain vigilant. The decline in delivery volumes suggests some hesitation among long-term holders, possibly due to valuation concerns or broader market uncertainties.

Investors should monitor the upcoming 24 February expiry closely, as the resolution of these option positions could trigger increased volatility. Those bullish on BEL may consider leveraging call options at the ₹420 and ₹430 strikes, while more conservative investors might await clearer signals or explore alternative Aerospace & Defence stocks with stronger momentum or more favourable valuations.

Summary

Bharat Electronics Ltd’s recent surge in call option trading activity, particularly at the ₹420 and ₹430 strikes expiring in late February, highlights a prevailing bullish sentiment among market participants. The stock’s proximity to its 52-week high, coupled with strong technical indicators, supports the case for potential near-term gains. Nonetheless, the downgrade in Mojo Grade to Hold and reduced investor participation underline the need for cautious optimism. As the Aerospace & Defence sector continues to benefit from favourable macro factors, BEL remains a key stock to watch, with option market activity providing valuable insights into investor expectations.

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