HDFC Bank Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

The most active put options for HDFC Bank are concentrated at the ₹930 strike price, with 2,271 contracts traded on 29 January 2026. This volume translates into a turnover of approximately ₹18.86 crores, reflecting significant investor interest in downside protection or speculative bearish bets. Open interest at this strike stands at 4,304 contracts, indicating sustained positioning rather than transient trades.

The underlying stock price on the same day closed at ₹935.45, marginally above the put strike price, suggesting that traders are positioning for a potential decline below this level in the near term. The expiry date for these options is 24 February 2026, giving investors roughly a month to monitor developments that could influence the stock’s trajectory.

Stock Performance and Technical Context

On 29 January, HDFC Bank marginally outperformed its private sector banking peers by 0.38%, despite a slight 0.07% decline in its own price. The stock has been on a modest upward trend, gaining 0.06% over the last day, though it has traded within a narrow range of ₹8, reflecting subdued volatility. Notably, the stock price remains above its 5-day moving average but below its 20-day, 50-day, 100-day, and 200-day moving averages, signalling a mixed technical outlook.

Investor participation appears to be waning, with delivery volumes falling by 1.4% compared to the 5-day average, registering 2.46 crore shares on 29 January. Liquidity remains robust, with an average traded value sufficient to support trades up to ₹73.94 crores, ensuring that option and stock market participants can execute sizeable transactions without significant price impact.

Bearish Positioning and Hedging Implications

The elevated put option activity at the ₹930 strike price suggests that market participants are either hedging existing long positions or speculating on a potential price correction. Given the stock’s current price proximity to this strike, these puts offer a strategic level of downside protection for investors wary of near-term volatility.

HDFC Bank’s Mojo Score currently stands at 48.0, with a Mojo Grade of Sell, downgraded from Hold on 28 January 2026. This downgrade reflects a cautious outlook based on fundamental and technical assessments, reinforcing the bearish sentiment evident in the options market. The bank’s market capitalisation remains substantial at ₹14,39,672 crores, categorising it firmly as a large-cap stock, which typically attracts significant institutional interest and hedging activity.

Sector and Market Context

Within the private sector banking industry, HDFC Bank’s slight outperformance on the day contrasts with the broader sector’s 0.20% decline and the Sensex’s 0.48% drop. This relative resilience may explain why investors are selectively hedging rather than outright selling, balancing optimism about the bank’s fundamentals with caution about broader market headwinds.

Technical indicators suggest a consolidation phase, with the stock’s price below key moving averages signalling resistance levels that may cap upside momentum. The narrow trading range and falling delivery volumes further imply a wait-and-watch approach among investors, who may be using put options to manage risk amid uncertain market conditions.

Expiry Patterns and Future Outlook

The 24 February 2026 expiry date for the active put options provides a near-term horizon for investors to reassess their positions. Market participants will be closely monitoring quarterly earnings, macroeconomic data, and regulatory developments that could influence HDFC Bank’s stock price. The current open interest and turnover figures suggest that the ₹930 strike will be a key level to watch, potentially acting as a psychological support or resistance depending on price action.

Investors should also consider the broader economic environment, including interest rate trends and credit growth in the banking sector, which could impact HDFC Bank’s performance and, by extension, option market dynamics.

Investor Takeaways

For investors and traders, the surge in put option activity at the ₹930 strike price for HDFC Bank signals a cautious stance in the market. While the stock’s fundamentals remain robust, the downgrade to a Sell grade and the technical indicators suggest that downside risks are being actively managed through options strategies.

Those holding long positions may consider protective puts to hedge against potential declines, while speculative traders might view the elevated open interest as an opportunity to capitalise on expected volatility. However, given the stock’s liquidity and large market capitalisation, any significant price moves are likely to be well-supported by institutional flows.

Monitoring the evolution of open interest and volume in the lead-up to the February expiry will provide further insights into market sentiment and potential price direction.

Conclusion

HDFC Bank’s active put option market reflects a nuanced investor outlook, balancing optimism about the bank’s long-term prospects with caution over near-term risks. The ₹930 strike price has emerged as a focal point for bearish positioning and hedging, underscoring the importance of this level in upcoming trading sessions. As the expiry date approaches, market participants will be closely watching price action and option flows to gauge the prevailing sentiment and adjust their strategies accordingly.

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