BSE Ltd Sees Surge in Put Option Activity Ahead of February Expiry

Put Option Activity Highlights

The most active put options for BSE Ltd are concentrated at the 2,700 strike price, with 9,022 contracts traded recently. This represents a substantial turnover of approximately ₹839.7 lakhs, signalling significant interest in downside protection or speculative bearish bets. Open interest stands at 2,241 contracts, indicating that a sizeable number of positions remain open and could influence price action as expiry nears.

Given the underlying stock price of ₹2,740, the 2,700 strike puts are slightly out-of-the-money, suggesting traders are either anticipating a mild correction or seeking to hedge existing long positions. The expiry date of 24 February 2026 is just days away, which typically intensifies options activity as traders adjust or close positions.

Stock Performance and Technical Context

On the day of analysis, BSE Ltd’s stock price showed a marginal gain of 0.01%, underperforming its sector benchmark by -0.87%. The sector itself gained 0.70%, while the broader Sensex rose 0.61%. This relative underperformance, albeit slight, may be contributing to the increased put buying as investors brace for potential volatility.

Technically, the stock is trading above its 100-day and 200-day moving averages, which generally indicates a longer-term bullish trend. However, it remains below its shorter-term 5-day, 20-day, and 50-day moving averages, reflecting some near-term weakness or consolidation. This mixed technical picture could be prompting cautious positioning through put options.

Investor participation appears to be waning, with delivery volume on 19 February 2026 falling by nearly 19% compared to the five-day average. This decline in delivery volume suggests reduced conviction among buyers, potentially increasing the appeal of protective puts.

Investor Sentiment and Hedging Implications

The heavy put option activity at the 2,700 strike price suggests a cautious or bearish stance among traders. This could be interpreted as a hedge against potential downside risks in the near term, especially given the stock’s recent underperformance relative to its sector and the broader market. Institutional investors and traders often use put options to protect gains or limit losses during periods of uncertainty.

Moreover, the open interest of 2,241 contracts indicates that many market participants are maintaining their bearish or protective positions rather than closing them out. This sustained interest could lead to increased volatility as expiry approaches, particularly if the stock price moves closer to the strike price.

Fundamental and Market Context

BSE Ltd operates within the Capital Markets industry and holds a market capitalisation of approximately ₹1,12,195 crores, categorising it as a mid-cap stock. The company’s Mojo Score has recently improved to 82.0, earning it a Strong Buy grade as of 6 February 2026, upgraded from a Buy rating. This upgrade reflects positive fundamental and technical assessments, signalling confidence in the company’s medium to long-term prospects despite short-term market jitters.

However, the stock’s market cap grade remains at 2, indicating moderate liquidity and market depth. Liquidity analysis shows that the stock can comfortably handle trade sizes up to ₹36.57 crores based on 2% of the five-day average traded value, which supports active trading in both the cash and derivatives segments.

Expiry Dynamics and Market Outlook

As the 24 February expiry date looms, options market activity typically intensifies, with traders adjusting positions to manage risk or capitalise on expected price moves. The concentration of put options at the 2,700 strike price for BSE Ltd suggests a key level of interest where traders expect potential support or downside pressure.

Given the stock’s current price near ₹2,740, a move below 2,700 could trigger further put option exercises or unwinding, potentially amplifying volatility. Conversely, if the stock holds above this level, put sellers may benefit from premium decay, and bearish bets could be trimmed.

Investors should monitor open interest trends and volume changes closely in the coming days to gauge shifts in market sentiment. The interplay between the stock’s technical indicators and options positioning will be critical in shaping near-term price action.

Balancing Bullish Fundamentals with Bearish Sentiment

While the fundamental outlook for BSE Ltd remains positive, as reflected in its Strong Buy Mojo Grade and improving score, the surge in put option activity highlights a degree of caution among market participants. This dichotomy is not uncommon in mid-cap stocks where short-term volatility can coexist with solid long-term prospects.

For investors, this environment underscores the importance of a balanced approach—considering both the company’s robust fundamentals and the market’s hedging behaviour. Those holding long positions might view the put option activity as a signal to implement protective strategies, while opportunistic traders could explore bearish plays or volatility trades around the expiry.

Conclusion

BSE Ltd’s recent surge in put option trading ahead of the 24 February expiry reveals a nuanced market sentiment. Despite the stock’s strong fundamental backdrop and recent rating upgrade, investors are actively seeking downside protection or positioning for a potential pullback. The 2,700 strike price has emerged as a focal point for bearish bets, supported by significant turnover and open interest.

As expiry approaches, monitoring the evolving options landscape alongside price and volume trends will be essential for investors aiming to navigate the stock’s near-term volatility. The interplay between technical signals and options market positioning offers valuable insights into the risk-reward dynamics shaping BSE Ltd’s trading environment.

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