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

Robust Call Option Volumes Signal Bullish Sentiment

Data from the derivatives market reveals that Bharat Electronics Ltd’s call options with strike prices of ₹410, ₹415, and ₹420 have attracted significant trading interest. The ₹410 strike call led the pack with 9,363 contracts traded, generating a turnover of approximately ₹1443.63 lakhs and an open interest of 3,572 contracts. Close behind, the ₹420 strike call saw 8,865 contracts exchanged, with turnover reaching ₹840.07 lakhs and open interest standing at 4,066 contracts. The ₹415 strike call also recorded substantial activity, with 4,930 contracts traded and turnover of ₹610.49 lakhs alongside an open interest of 1,689 contracts.

This concentration of activity near the current underlying value of ₹414.95 suggests that market participants are positioning for a potential rally beyond these strike prices in the near term. The January expiry date further intensifies focus on these strikes, as traders seek to capitalise on expected price movements within the next three weeks.

Underlying Stock Performance Supports Positive Outlook

Bharat Electronics Ltd has been on a steady upward trajectory, gaining 2.57% in the latest trading session, outperforming the Aerospace & Defense sector’s 2.43% gain and comfortably beating the Sensex’s marginal decline of 0.15%. The stock has recorded consecutive gains over the past two days, delivering a cumulative return of 2.99% during this period. Notably, BEL is trading above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling sustained bullish momentum across multiple timeframes.

Despite this positive price action, investor participation has shown signs of moderation. Delivery volumes on 2 January stood at 56.48 lakh shares, marking a 39.79% decline compared to the five-day average delivery volume. This dip in participation could indicate cautious optimism among long-term holders, even as short-term traders ramp up activity in the options market.

Market Capitalisation and Quality Metrics

Bharat Electronics Ltd remains a large-cap heavyweight with a market capitalisation of ₹2,94,657 crore. The company’s Mojo Score currently stands at 65.0, reflecting a Hold rating, a downgrade from a previous Buy rating issued on 17 November 2025. The downgrade stems from a reassessment of the company’s growth prospects and valuation metrics, although the stock retains a strong market cap grade of 1, indicating its prominence within the Aerospace & Defense sector.

Expiry Patterns and Strike Price Concentration

The concentration of call option activity at strikes ₹410, ₹415, and ₹420 for the 27 January 2026 expiry is telling. The highest open interest at ₹420 strike (4,066 contracts) indicates that traders are betting on the stock surpassing this level within the next three weeks. The ₹410 and ₹415 strikes also show robust open interest, suggesting layered bullish positioning with traders seeking to capitalise on incremental gains.

Turnover figures reinforce this narrative, with the ₹410 strike call generating the highest turnover of ₹1443.63 lakhs, followed by ₹420 and ₹415 strikes. This pattern is consistent with a market expecting upward price movement but also hedging around key resistance levels.

Sectoral Context and Comparative Performance

The Aerospace & Defense sector has gained 2.64% recently, buoyed by government spending announcements and strategic defence contracts. Bharat Electronics Ltd’s outperformance relative to the sector average underscores its leadership position and investor confidence in its growth trajectory. However, the recent downgrade to a Hold rating by MarketsMOJO reflects a more cautious stance, factoring in valuation pressures and potential near-term volatility.

Investors should weigh the strong technical momentum and options market optimism against the tempered fundamental outlook. The stock’s liquidity remains adequate, with a 2% threshold of the five-day average traded value supporting trade sizes up to ₹13.27 crore, ensuring smooth execution for institutional and retail participants alike.

Investor Takeaway: Balancing Optimism with Caution

The surge in call option volumes and open interest at near-the-money strikes for Bharat Electronics Ltd signals a bullish market sentiment ahead of the January expiry. Traders appear confident in the stock’s ability to breach resistance levels around ₹420, supported by strong technical indicators and sector tailwinds.

However, the downgrade to a Hold rating and declining delivery volumes suggest that longer-term investors are adopting a more measured approach. This divergence between short-term speculative activity and fundamental reassessment highlights the importance of a balanced investment strategy.

For investors considering exposure to Bharat Electronics Ltd, monitoring the options market alongside price action and fundamental updates will be crucial. The stock’s liquidity and large-cap status make it a viable candidate for both tactical trades and strategic holdings, provided risk is managed prudently.

As the January 27 expiry approaches, market participants will closely watch whether the bullish positioning in call options translates into sustained price gains or if profit-taking and volatility emerge in response to broader market dynamics.

Only Rs. 9,999 - Get MojoOne + Stock of the Week for 1 Year (MRP = Rs. 34,999) Start Today