Eternal Ltd Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Surge Highlights Investor Caution

On 3 February 2026, Eternal Ltd’s put options with a strike price of ₹280 expiring on 24 February 2026 emerged as the most actively traded contracts in the market. A total of 2,668 contracts changed hands, generating a turnover of ₹320.91 lakhs. The open interest for these puts stands at 1,279 contracts, indicating sustained investor interest in downside protection or speculative bearish bets.

The underlying stock price at the time was ₹284.90, just above the ₹280 strike, suggesting that traders are positioning for a potential pullback or increased volatility in the near term. This activity contrasts with the stock’s recent price action, which has been notably positive.

Price Performance and Technical Context

Eternal Ltd has outperformed its sector by 2.1% today, with a consecutive two-day gain amounting to a 5.75% return. The stock opened with a gap up of 7.83% and touched an intraday high of ₹299.90, representing a near 10% rally on the day. Despite this strong short-term momentum, the weighted average price of traded volumes clustered closer to the day’s low, hinting at some profit-taking or cautious trading.

Technically, the stock is trading above its 5-day and 20-day moving averages but remains below the 50-day, 100-day, and 200-day averages. This mixed technical picture suggests that while short-term sentiment is bullish, longer-term trends have yet to confirm a sustained uptrend.

Sector and Market Context

The broader IT - Software sector gained 2.11% on the day, while the Sensex rose 2.57%, indicating a generally positive market environment. However, investor participation in Eternal Ltd has shown signs of waning, with delivery volumes falling by 58.38% compared to the five-day average, despite the stock’s liquidity remaining sufficient for sizeable trades up to ₹28.61 crores.

This divergence between price gains and declining delivery volumes may reflect cautious optimism or hedging activity, consistent with the heavy put option interest observed.

Mojo Score and Analyst Ratings

Eternal Ltd currently holds a Mojo Score of 31.0, categorised as a Sell rating by MarketsMOJO. This represents a downgrade from a previous Hold rating on 23 October 2025, reflecting deteriorating fundamentals or market sentiment. The company’s market capitalisation stands at a substantial ₹2,74,938.49 crores, placing it firmly in the large-cap category, but its Market Cap Grade is rated at 1, indicating limited upside potential relative to its size.

These ratings and scores provide a cautionary backdrop to the recent price gains and heavy put option activity, suggesting that investors may be hedging against potential downside risks or awaiting clearer signals before committing further capital.

Put Option Activity as a Hedging or Speculative Tool

The concentration of put option trades at the ₹280 strike price, close to the current market price, is a classic indicator of hedging strategies. Institutional investors or large traders may be protecting existing long positions against a possible correction or volatility spike ahead of the February expiry. Alternatively, speculative traders could be betting on a near-term decline, capitalising on the stock’s recent volatility and mixed technical signals.

Open interest of 1,279 contracts at this strike is significant, signalling that these positions are not merely transient but may influence price dynamics as expiry approaches. Traders should monitor changes in open interest and volume to gauge shifts in market sentiment.

Implications for Investors

For investors, the juxtaposition of strong short-term price gains with heavy put option activity and a Sell Mojo Grade suggests a nuanced risk-reward profile. While the stock has demonstrated resilience and outperformance relative to its sector and the broader market, the underlying caution expressed through options markets and analyst downgrades warrants prudence.

Investors with existing exposure to Eternal Ltd may consider protective strategies such as buying puts or tightening stop-loss levels. New entrants should weigh the potential for continued momentum against the risk of a pullback, especially given the stock’s position below key longer-term moving averages.

Expiry Patterns and Market Outlook

The 24 February 2026 expiry date for these put options is less than three weeks away, a period often marked by increased volatility as traders adjust positions ahead of contract settlement. The clustering of put activity at ₹280 suggests a key support level that market participants are watching closely.

Should the stock price dip below this level, it could trigger further downside pressure as put holders exercise contracts or unwind positions. Conversely, a sustained rally above the recent intraday highs near ₹300 could diminish bearish sentiment and reduce put option premiums.

Given the stock’s liquidity and trading volumes, price movements around these strike prices are likely to be closely monitored by both retail and institutional investors.

Conclusion

Eternal Ltd’s recent surge in put option trading highlights a complex market environment where bullish price action coexists with significant hedging and bearish speculation. The stock’s downgrade to a Sell rating by MarketsMOJO, combined with mixed technical indicators and declining delivery volumes, underscores the need for cautious analysis.

Investors should remain vigilant of evolving option market dynamics and broader sector trends in the E-Retail and E-Commerce space. While momentum remains positive in the short term, the heavy put option interest signals that downside risks are being actively priced in, making risk management paramount in portfolio decisions.

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