HDFC Bank Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

On 9 February 2026, HDFC Bank Ltd. emerged as the most active stock in put options trading, with 4,103 contracts exchanged at the ₹940 strike price for the expiry dated 24 February 2026. This volume translates to a turnover of approximately ₹24.85 crores, underscoring significant investor interest in downside protection or speculative bearish bets. The open interest stands at 2,655 contracts, indicating sustained engagement in these positions beyond intraday trading.

The underlying stock price hovered near ₹937.7, just below the ₹940 strike, which is a critical technical level. The proximity of the spot price to the strike price suggests that traders are positioning for potential downside moves or volatility in the near term. The expiry date being just over two weeks away adds urgency to these trades, as investors seek to hedge or capitalise on expected price movements before the options lapse.

Stock Performance and Technical Context

HDFC Bank Ltd. has underperformed its sector by 0.33% on the day, with a 1-day return of -0.25% compared to the sector’s -0.05% and the Sensex’s positive 0.59%. The stock has been on a three-day losing streak, cumulatively falling by 1.7%, signalling a short-term bearish trend. Technical indicators reveal a mixed picture: the stock price remains above its 20-day moving average but is trading below the 5-day, 50-day, 100-day, and 200-day moving averages. This suggests that while some short-term support exists, the broader trend remains subdued.

Investor participation has also declined, with delivery volume on 6 February falling by 51.18% against the 5-day average, indicating reduced conviction among buyers. Despite this, liquidity remains robust, with the stock’s traded value supporting sizeable transactions up to ₹59.07 crores, making it accessible for institutional and retail traders alike.

Investor Sentiment and Hedging Implications

The elevated put option activity at the ₹940 strike price suggests that investors are either hedging existing long positions or speculating on a potential decline in HDFC Bank’s share price. Given the bank’s current market cap of ₹14,46,326 crores and its classification as a large-cap private sector bank, such bearish positioning is noteworthy. It indicates a cautious outlook amid broader market uncertainties or sector-specific headwinds.

HDFC Bank’s Mojo Score currently stands at 54.0 with a Mojo Grade of Hold, upgraded from Sell on 3 February 2026. This upgrade reflects some improvement in fundamentals or market perception, yet the grade remains neutral, signalling neither strong buy nor sell conviction. The Market Cap Grade is 1, indicating the bank’s dominant large-cap status but also highlighting limited upside potential relative to smaller, more volatile stocks.

Options traders often use put contracts as insurance against downside risk, especially when the underlying stock shows signs of weakening momentum. The fact that open interest remains elevated suggests that these bearish bets are not merely speculative but part of a broader risk management strategy. This is further supported by the stock’s recent underperformance relative to its sector and the Sensex, as well as declining delivery volumes.

Expiry Patterns and Market Outlook

The 24 February 2026 expiry date is significant as it falls within the current quarterly options cycle, a period often marked by increased volatility and position adjustments. Traders may be positioning ahead of upcoming earnings announcements, macroeconomic data releases, or sectoral developments that could impact banking stocks.

Given the current strike price concentration and open interest, a break below ₹940 could trigger further downside pressure, potentially accelerating put buying and price declines. Conversely, if the stock stabilises above this level, some of the bearish option positions may be unwound, leading to reduced volatility.

Comparative Sector and Market Performance

While HDFC Bank has shown some weakness, the private sector banking sector as a whole has been relatively resilient, with only marginal declines. The Sensex’s positive return on the day indicates broader market strength, which contrasts with the bank’s underperformance. This divergence may reflect sector rotation or profit-taking in large-cap banking stocks.

Investors should monitor put option volumes and open interest trends closely as they provide valuable insights into market sentiment and potential price trajectories. The current data suggests a cautious stance towards HDFC Bank, with a tilt towards downside risk in the short term.

Conclusion: Strategic Positioning Amid Uncertainty

HDFC Bank Ltd.’s recent surge in put option activity highlights a growing bearish sentiment or hedging demand among investors. Despite an upgrade in its Mojo Grade to Hold, the bank faces short-term headwinds reflected in its price action and technical indicators. The concentration of put contracts at the ₹940 strike price with a near-term expiry suggests that market participants are bracing for potential volatility or downside risk.

For investors, this environment calls for careful monitoring of option market dynamics alongside fundamental and technical analysis. While HDFC Bank remains a cornerstone large-cap stock in the private banking sector, the current data advises prudence and consideration of risk mitigation strategies.

As the expiry date approaches, shifts in open interest and volume will provide further clues on the stock’s directional bias. Market participants should remain alert to sector developments and broader economic indicators that could influence banking stocks in the weeks ahead.

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