HDFC Bank Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

On 11 February 2026, HDFC Bank’s put options with a strike price of ₹930 expiring on 24 February 2026 emerged as the most actively traded contracts in the segment. A total of 2,742 contracts changed hands, generating a turnover of approximately ₹1.53 crores. Open interest for these puts stands at 4,767 contracts, indicating sustained interest and potential accumulation of bearish bets or protective hedges.

The underlying stock price at the time was ₹932.5, just marginally above the ₹930 strike, suggesting that traders are positioning for a possible near-term downside or volatility around this level. The concentration of activity in these puts, combined with the open interest build-up, points to a market expectation of either a correction or increased risk in the near term.

Stock Performance and Technical Context

HDFC Bank’s stock performance on the day was largely in line with its sector peers, registering a modest 0.02% gain compared to the Private Sector Bank sector’s slight decline of 0.03% and the Sensex’s marginal fall of 0.01%. This follows a four-day consecutive decline, with the stock showing signs of a trend reversal as it gained after this period of weakness.

Technically, the stock has traded within a narrow range of ₹6.15, reflecting subdued volatility. It currently trades above its 20-day moving average but remains below the 5-day, 50-day, 100-day, and 200-day moving averages, indicating mixed momentum signals. The delivery volume on 10 February was 1.95 crore shares, down 8.08% against the five-day average, suggesting falling investor participation despite the recent price stabilisation.

Liquidity remains robust, with the stock’s traded value supporting trade sizes up to ₹50.58 crores based on 2% of the five-day average traded value, ensuring that option and stock trades can be executed without significant market impact.

Mojo Score and Analyst Ratings

HDFC Bank currently holds a Mojo Score of 48.0, categorised as a 'Sell' grade, a downgrade from its previous 'Hold' rating as of 9 February 2026. This shift reflects a deterioration in the bank’s overall quality and trend metrics, signalling caution to investors. The bank’s market capitalisation remains substantial at ₹14,35,092.81 crores, firmly placing it in the large-cap category, but the low Market Cap Grade of 1 indicates limited upside potential relative to its size and valuation.

These ratings align with the increased put option activity, suggesting that market participants are hedging against potential downside risks or expressing bearish views on the stock’s near-term trajectory.

Expiry Patterns and Market Implications

The 24 February 2026 expiry date is a critical juncture for HDFC Bank options traders. The concentration of put contracts at the ₹930 strike price, close to the current market price, implies that traders are bracing for volatility or a possible price correction before expiry. Such positioning often precedes significant market moves, as investors seek to protect gains or speculate on downside risks.

Given the stock’s recent narrow trading range and mixed technical signals, the elevated put activity could also represent strategic hedging by institutional investors or traders anticipating sector-specific or macroeconomic headwinds impacting private sector banks.

Sector and Market Context

Within the Private Sector Bank sector, HDFC Bank’s performance and option market activity stand out. While the sector has experienced modest declines, HDFC Bank’s slight outperformance and put option surge highlight a divergence in investor sentiment. This may reflect concerns specific to the bank’s fundamentals, regulatory environment, or broader economic factors affecting credit growth and asset quality.

Investors should monitor upcoming earnings announcements, policy developments, and macroeconomic indicators closely, as these will likely influence the stock’s price action and option market dynamics in the coming weeks.

Investor Takeaways and Outlook

For investors and traders, the surge in put option activity at the ₹930 strike price ahead of the 24 February expiry serves as a cautionary signal. While the stock has shown resilience with a slight uptick after a brief decline, the technical indicators and bearish option positioning suggest that downside risks remain present.

Those holding long positions may consider protective strategies such as buying puts or tightening stop-loss levels to mitigate potential losses. Conversely, traders with a bearish outlook might view the current option market activity as an opportunity to capitalise on expected volatility or price corrections.

It is also prudent to keep an eye on sectoral developments and macroeconomic factors that could influence credit demand, asset quality, and regulatory policies impacting private sector banks like HDFC Bank.

Overall, the combination of a downgraded Mojo Grade, increased put option interest, and mixed technical signals underscores a cautious stance towards HDFC Bank in the near term.

Conclusion

HDFC Bank Ltd.’s recent spike in put option trading at the ₹930 strike price ahead of the 24 February 2026 expiry highlights a growing bearish sentiment or hedging activity among market participants. Despite a slight recovery in the stock price and sector-aligned performance, the downgrade in analyst ratings and technical indicators suggest investors should remain vigilant. The evolving option market dynamics provide valuable insights into market expectations and risk management strategies, making it essential for investors to monitor developments closely as expiry approaches.

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