Divis Laboratories Sees Heavy Put Option Activity Amid Bearish Sentiment

Heavy Put Option Trading Highlights Investor Caution

On 11 February 2026, Divis Laboratories (NSE: DIVISLAB) recorded the most active put option contracts in the market, with 10,835 contracts traded at the ₹6,000 strike price expiring on 24 February 2026. This activity generated a turnover of approximately ₹727.79 lakhs, reflecting substantial investor interest in downside protection or speculative bearish bets. Open interest at this strike stands at 1,848 contracts, indicating that a sizeable number of traders are maintaining or building positions in puts.

The underlying stock price closed at ₹6,324.5, suggesting that the ₹6,000 strike is positioned slightly out-of-the-money, a common level for hedging against moderate downside risk. The concentration of put activity at this strike price points to a market expectation of potential price weakness or increased volatility in the near term.

Stock Performance Contrasts Options Sentiment

Interestingly, Divis Laboratories has outperformed its sector by 1.52% on the day, with a 2.31% gain compared to the Pharmaceuticals & Biotechnology sector’s 0.72% and the Sensex’s marginal 0.02% rise. The stock has been on a three-day winning streak, delivering a cumulative return of 4.81% during this period. It touched an intraday high of ₹6,363.5, up 3.04% from the previous close, demonstrating short-term strength.

Technical indicators show the stock trading above its 5-day, 20-day, and 50-day moving averages, signalling positive momentum in the short to medium term. However, it remains below its 100-day and 200-day moving averages, suggesting that longer-term trends may still be under pressure or consolidating.

Despite the recent gains, delivery volumes have declined sharply, with a 36.21% drop in delivery volume on 10 February compared to the five-day average. This falling investor participation could imply that the recent rally lacks strong conviction, potentially prompting some investors to hedge their positions through put options.

Mojo Score Downgrade Reflects Growing Concerns

Adding to the cautious tone, Divis Laboratories’ Mojo Score currently stands at 43.0, categorised as a Sell rating. This represents a downgrade from a previous Hold grade on 1 February 2026, signalling deteriorating fundamentals or market sentiment. The company’s market capitalisation remains robust at ₹1,64,670 crores, firmly placing it in the large-cap segment, but the Market Cap Grade is rated at 1, indicating limited upside potential relative to peers.

The downgrade and bearish options activity together suggest that investors are increasingly wary of near-term risks, possibly due to sector headwinds, regulatory concerns, or valuation pressures. The pharmaceutical sector has faced mixed headwinds recently, including pricing scrutiny and supply chain challenges, which may be influencing sentiment.

Expiry Patterns and Hedging Strategies

The expiry date of 24 February 2026 is a critical juncture for options traders. The heavy put volume at the ₹6,000 strike price indicates that market participants are positioning for a potential correction or increased volatility before this date. Such positioning can serve as a hedge against existing long stock holdings or as a speculative bet on downside moves.

Open interest data confirms that these positions are not merely intraday trades but are being held over time, reflecting a strategic approach to risk management. The liquidity of Divis Laboratories stock, with a 5-day average traded value sufficient to support trades of around ₹4.26 crores, facilitates active options trading and efficient price discovery.

Balancing Bullish Momentum and Bearish Hedging

While the stock’s recent price action and technical indicators show resilience, the surge in put option activity reveals a nuanced market outlook. Investors appear to be balancing optimism about near-term gains with caution against potential setbacks. This duality is common in large-cap pharmaceutical stocks, where regulatory developments and global market dynamics can swiftly alter sentiment.

For investors, the current environment suggests prudence. Those holding Divis Laboratories shares may consider protective strategies such as buying puts or employing collars to mitigate downside risk. Conversely, speculative traders might view the elevated put volumes as an opportunity to capitalise on volatility or potential price corrections.

Outlook and Investor Takeaways

Divis Laboratories remains a key player in the Pharmaceuticals & Biotechnology sector, but the recent downgrade and options market activity highlight emerging risks. Investors should closely monitor upcoming earnings, regulatory announcements, and sector developments that could influence the stock’s trajectory.

Given the current put option interest and technical positioning, a cautious approach is advisable. Investors with a bullish outlook might consider phased entries or hedging strategies, while those more bearish may find opportunities in the elevated volatility and put premiums.

Ultimately, the interplay between the stock’s solid fundamentals and the cautious sentiment reflected in the options market will shape Divis Laboratories’ near-term performance.

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