HDFC Bank Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

On 12 February 2026, HDFC Bank’s put options with a strike price of ₹920 and expiry on 24 February 2026 emerged as the most actively traded contracts in the segment. A total of 8,604 contracts changed hands, generating a turnover of approximately ₹440.57 lakhs. The open interest for these puts stands at 4,571 contracts, indicating sustained interest and potential accumulation of bearish bets ahead of the expiry date.

The underlying stock price hovered around ₹920.45, closely aligned with the strike price, which often acts as a psychological and technical pivot for option traders. The concentration of put activity at this strike suggests that market participants are positioning for either a downside move or seeking protection against potential declines in the near term.

Technical and Market Context

HDFC Bank’s share price has underperformed its sector and benchmark indices marginally on the day, with a 0.08% decline compared to the sector’s 0.54% fall and Sensex’s 0.87% drop. Despite this, the stock outperformed the sector by 0.69% over the trading session, reflecting some resilience amid broader market weakness.

However, the technical picture remains cautious. The stock is trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling a persistent downtrend across multiple timeframes. This technical weakness is compounded by a recent downgrade in the mojo grade from Hold to Sell on 9 February 2026, with a current mojo score of 48.0, reflecting deteriorating fundamentals or sentiment.

Investor participation has risen notably, with delivery volumes reaching 2.14 crore shares on 12 February, marking a 17.88% increase over the five-day average. This heightened activity suggests that investors are actively repositioning their portfolios amid the evolving market dynamics.

Bearish Positioning and Hedging Strategies

The heavy put option activity at the ₹920 strike price indicates that traders are either hedging existing long positions or speculating on a potential decline in HDFC Bank’s share price. Put options serve as insurance against downside risk, and the elevated open interest suggests that market participants are increasingly cautious about near-term price movements.

Given the stock’s trading below all major moving averages, the bearish positioning is consistent with technical signals pointing to weakness. The expiry date of 24 February 2026 is less than two weeks away, which may intensify volatility as traders adjust their positions ahead of the options expiry.

Moreover, the market cap grade of 1 and the large-cap status of HDFC Bank (₹14,15,627 crore) make it a preferred instrument for institutional investors to implement hedging strategies. The liquidity profile supports sizeable trades, with the stock’s average traded value allowing for transactions up to ₹51.89 crore without significant market impact.

Comparative Sector and Market Performance

Within the private sector banking space, HDFC Bank’s recent mojo downgrade from Hold to Sell contrasts with some peers maintaining more favourable outlooks. The bank’s mojo score of 48.0 is below the threshold for a neutral or positive rating, signalling caution for investors. This downgrade, dated 9 February 2026, reflects a reassessment of the bank’s growth prospects, asset quality, or valuation metrics.

Despite the bearish signals, the stock’s outperformance relative to the sector on the day suggests pockets of resilience. However, the broader market environment, with the Sensex down 0.87%, indicates prevailing risk-off sentiment that could weigh on banking stocks in the near term.

Investor Takeaways and Outlook

For investors, the surge in put option activity at the ₹920 strike price and the stock’s technical weakness warrant a cautious approach. The downgrade to a Sell mojo grade and the stock’s position below all key moving averages suggest that downside risks remain elevated in the short term.

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 activity as confirmation of a likely correction or consolidation phase.

It is also prudent to monitor open interest trends and volume patterns in the coming days, especially as the 24 February expiry approaches. Any significant unwinding or rollovers of put positions could signal shifts in market sentiment.

Given the stock’s large-cap status and liquidity, institutional investors will likely continue to influence price action through strategic hedging and portfolio adjustments.

Conclusion

HDFC Bank Ltd.’s recent spike in put option trading highlights growing bearish sentiment and hedging activity amid a challenging technical backdrop. The concentration of puts at the ₹920 strike price expiring later this month underscores investor caution and the potential for near-term volatility. While the stock has shown some resilience relative to its sector, the downgrade in mojo grade and persistent downtrend across moving averages suggest that investors should remain vigilant and consider risk management strategies carefully.

As the expiry date nears, market participants will be closely watching option flows and price movements to gauge the next directional move for this key private sector banking stock.

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