Bharat Heavy Electricals Sees Surge in Put Option Activity Ahead of January Expiry

Put Option Activity Highlights

On 9 January 2026, BHEL recorded a remarkable surge in put option trading, with 2,629 contracts changing hands at the ₹270 strike price for the expiry dated 27 January 2026. This activity generated a turnover of ₹563.13 lakhs, reflecting substantial investor interest in downside protection or speculative bearish bets. The open interest at this strike stands at 1,428 contracts, indicating sustained interest and potential accumulation of bearish positions.

The underlying stock price of BHEL was ₹275.45 at the time, placing the ₹270 strike slightly out-of-the-money. This suggests that traders are either anticipating a near-term correction or are hedging existing long positions against a moderate decline. The heavy put option volume contrasts with the stock’s recent positive price action, highlighting a nuanced market outlook.

Stock Price and Technical Context

BHEL’s stock performance on 9 January was inline with its sector, the Heavy Electrical Equipment industry, which saw a modest 0.35% gain. The stock opened with a gap up of 2.67%, reaching an intraday high of ₹281.25, a 3.5% increase from the previous close. Despite this strength, the price remains below its short-term moving averages (5-day, 20-day, and 50-day), though it is trading above the longer-term 100-day and 200-day moving averages. This mixed technical picture may be prompting investors to adopt a cautious stance.

Investor participation has notably increased, with delivery volumes on 8 January rising by 308.73% compared to the five-day average, reaching 1.65 crore shares. This surge in delivery volume indicates genuine buying interest, yet the simultaneous rise in put option activity suggests hedging against potential volatility or downside risk.

Market Capitalisation and Mojo Ratings

BHEL is classified as a mid-cap company with a market capitalisation of approximately ₹95,460.77 crore. The company’s Mojo Score currently stands at 60.0, reflecting a Hold rating, an improvement from a previous Sell grade assigned on 15 September 2025. The Market Cap Grade is 2, indicating moderate size and liquidity. The recent upgrade in rating may have contributed to the stock’s positive price movement, but the cautious sentiment in options markets reveals that investors remain vigilant.

Implications of Heavy Put Option Trading

The pronounced put option activity at the ₹270 strike price suggests that market participants are either hedging existing long positions or speculating on a potential near-term decline. Given the stock’s current price of ₹275.45, a drop below ₹270 would represent a correction of approximately 2%, which is not uncommon in volatile mid-cap stocks.

Put options serve as insurance for investors, allowing them to limit downside risk while maintaining upside exposure. The open interest of 1,428 contracts at this strike price indicates that a sizeable number of investors are prepared for downside scenarios. This could be a reflection of broader market uncertainties or company-specific factors such as order book developments, government policy changes, or sectoral headwinds.

Expiry Patterns and Investor Behaviour

With the 27 January 2026 expiry approaching, option traders often adjust their positions to manage risk or capitalise on expected price movements. The concentration of put option volume at a single strike price is a common feature ahead of expiry, as investors seek to hedge or speculate within a defined price range.

Interestingly, despite the bearish undertone in options, BHEL’s stock has shown resilience with a 0.88% one-day return, outperforming the Sensex which declined by 0.19%. This divergence between spot price performance and options market sentiment highlights the complexity of investor positioning in the current environment.

Sectoral and Broader Market Context

BHEL operates within the Heavy Electrical Equipment sector, which has experienced moderate gains recently. The sector’s 0.35% one-day return suggests a stable environment, though global supply chain challenges and fluctuating commodity prices continue to pose risks. Investors are likely factoring these elements into their hedging strategies, reflected in the elevated put option volumes.

Liquidity in BHEL remains robust, with the stock’s traded value supporting trade sizes up to ₹11.25 crore based on 2% of the five-day average traded value. This liquidity facilitates active options trading and allows institutional investors to implement complex hedging strategies efficiently.

Outlook and Investor Considerations

Investors should weigh the mixed signals from BHEL’s price action and options market activity carefully. The recent upgrade from Sell to Hold by MarketsMOJO, accompanied by a Mojo Score of 60.0, suggests moderate confidence in the stock’s medium-term prospects. However, the heavy put option interest indicates that downside risks are not fully discounted.

Given the stock’s position relative to key moving averages and the sector’s stable but cautious environment, a prudent approach would be to monitor price movements closely around the ₹270 level. Investors holding long positions may consider protective puts to mitigate risk, while those seeking entry points might wait for clearer technical confirmation.

Overall, BHEL’s current trading dynamics reflect a market balancing optimism with caution, underscored by active hedging and speculative activity in the options market.

Summary

Bharat Heavy Electricals Ltd is witnessing significant put option activity at the ₹270 strike price ahead of the 27 January expiry, signalling increased bearish hedging or speculative positioning. Despite a positive price trend and recent rating upgrade, the options market reveals investor caution amid mixed technical indicators and sectoral factors. Liquidity remains strong, supporting active trading and complex strategies. Investors should remain vigilant and consider protective measures as the expiry date approaches.

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