HDFC Bank Sees Heavy Put Option Activity Ahead of February Expiry

Heavy Put Option Volumes Signal Bearish Sentiment

Data from the options market reveals that HDFC Bank’s put options have been among the most actively traded contracts in recent sessions. The strike prices of 920, 900, and 930 have attracted significant interest, with 1,535, 1,865, and 2,533 contracts traded respectively for the 24 February expiry. The turnover for these strikes is substantial, with the 930 strike alone generating ₹220.95 lakhs in turnover, followed by ₹102.07 lakhs at 920 and ₹73.65 lakhs at 900.

Open interest figures further underscore this trend, with 4,647 contracts outstanding at the 920 strike, 4,347 at 900, and 3,953 at 930. These numbers suggest that traders are positioning themselves for potential downside or are actively hedging existing long exposures in the stock.

Underlying Price and Market Context

HDFC Bank’s underlying share price currently stands at ₹933.20, placing the 930 strike put option just slightly out-of-the-money, while the 920 and 900 strikes are further below the current market price. This clustering of put activity near and below the current price level indicates a cautious stance among investors, possibly anticipating a correction or increased volatility in the near term.

Despite the recent uptick in put option interest, the stock has recorded a modest 0.69% gain on the day, underperforming its sector which rose 1.46%. Over the last two days, HDFC Bank has delivered a cumulative return of 1.71%, yet it remains below its 20-day, 50-day, 100-day, and 200-day moving averages, signalling a mixed technical outlook.

Investor Participation and Liquidity

Investor participation has been rising, with delivery volumes reaching 2.56 crore shares on 27 January, a 1.23% increase over the five-day average. The stock’s liquidity remains robust, supporting trade sizes up to ₹72.82 crore based on 2% of the five-day average traded value. This liquidity facilitates active options trading and allows institutional players to implement complex hedging strategies efficiently.

Mojo Score Downgrade Reflects Cautious Outlook

HDFC Bank currently holds a Mojo Score of 60.0 with a Mojo Grade of Hold, downgraded from Buy on 12 January 2026. This adjustment reflects a tempered outlook amid recent price action and sector dynamics. The bank’s market capitalisation stands at a commanding ₹14,35,286.80 crore, categorising it as a large-cap stock with significant institutional interest.

The downgrade signals that while the bank remains fundamentally strong, near-term headwinds and technical resistance levels may limit upside potential. Investors are advised to monitor the evolving options activity as a barometer of market sentiment and potential volatility.

Expiry Patterns and Hedging Strategies

The concentration of put option activity around the 900 to 930 strike prices for the 24 February expiry suggests that traders are either hedging long positions or speculating on a price decline. The open interest build-up at these strikes indicates that the market is pricing in a possible downside scenario or at least preparing for increased price fluctuations.

Such positioning is common ahead of quarterly earnings announcements or macroeconomic events that could impact banking sector performance. Given HDFC Bank’s pivotal role in the private sector banking space, any shifts in interest rates, credit growth, or regulatory changes could influence investor sentiment and option market dynamics.

Sector and Market Comparison

While HDFC Bank has underperformed its sector by 1.03% today, the broader Sensex has gained 0.52%. This relative weakness may be contributing to the increased put option interest as investors seek protection against further downside. The private sector banking industry remains competitive, with peers also experiencing varied option market activity reflecting divergent views on growth and risk.

Investor Takeaway

For investors, the heightened put option activity in HDFC Bank signals a need for caution. While the bank’s fundamentals remain solid, the technical indicators and options market positioning suggest that downside risks are being actively priced in. Those holding long positions may consider protective strategies such as buying puts or tightening stop-loss levels.

Conversely, traders with a bearish outlook might view the current elevated put volumes as an opportunity to capitalise on potential price corrections. However, given the stock’s liquidity and institutional interest, sudden reversals cannot be ruled out, emphasising the importance of disciplined risk management.

Outlook for February Expiry

As the 24 February 2026 expiry date approaches, market participants will closely watch the evolution of open interest and volume in these key put strikes. Any significant unwinding or addition of positions could provide clues on the stock’s near-term trajectory. Additionally, macroeconomic developments and sector-specific news will likely influence the options market sentiment and HDFC Bank’s share price movement.

Conclusion

In summary, HDFC Bank’s surge in put option trading ahead of the February expiry highlights a cautious market stance amid mixed technical signals and sector underperformance. The stock’s downgrade to a Hold rating by MarketsMOJO further reinforces the need for prudent positioning. Investors should monitor options market trends alongside fundamental developments to navigate the evolving landscape effectively.

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