HDFC Bank Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

Data from the options market reveals that HDFC Bank’s put options expiring on 24 February 2026 have attracted significant volumes, particularly at strike prices of ₹900, ₹905, and ₹910. The ₹900 strike saw the highest number of contracts traded at 4,771, generating a turnover of ₹69.8 lakhs and an open interest of 3,275 contracts. The ₹910 strike followed closely with 4,063 contracts traded, turnover of ₹110.8 lakhs, and open interest of 1,985. Meanwhile, the ₹905 strike recorded 3,015 contracts traded with a turnover of ₹59.2 lakhs and open interest of 1,166.

These strike prices are clustered just below and around the current underlying value of ₹913.25, indicating that market participants are positioning for potential downside or are actively hedging existing long exposures. The concentration of open interest at these levels suggests that traders are anticipating volatility or a correction in the near term.

Price and Technical Context

HDFC Bank’s stock price has been under pressure, trading below all key moving averages including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. The stock has declined for four consecutive sessions, losing 1.29% over this period, and closed with a marginal 0.24% loss on the latest trading day, underperforming the sector’s 0.24% gain and the Sensex’s 0.07% rise. The narrow trading range of ₹5.6 and falling delivery volumes—down 54.89% compared to the five-day average—point to subdued investor participation and cautious sentiment.

Liquidity remains adequate, with the stock’s average traded value supporting trade sizes of up to ₹50.35 crores, ensuring that option market activity is supported by sufficient underlying market depth.

Mojo Score and Analyst Ratings

HDFC Bank currently holds a Mojo Score of 48.0, categorised as a Sell rating by MarketsMOJO, reflecting a downgrade from its previous Hold status on 9 February 2026. The bank’s market cap grade is 1, indicating its large-cap status but also signalling limited upside potential in the near term according to the platform’s multi-factor evaluation. This downgrade aligns with the increased put option activity, suggesting that market participants and analysts alike are adopting a more cautious stance.

Implications of Put Option Concentration

The heavy put option volumes at strikes near the current price level imply that investors are either hedging against further downside risk or speculating on a decline. Open interest data confirms that these positions are not merely intraday trades but represent sustained bearish bets or protective strategies. The clustering of activity around ₹900 to ₹910 strikes, just below the current price, indicates a critical support zone that traders are watching closely.

Such positioning can also reflect broader concerns about sectoral headwinds or macroeconomic factors impacting private sector banks. Given HDFC Bank’s integral role in the banking sector and its sizeable market capitalisation of ₹14,05,547.69 crores, shifts in investor sentiment here often presage wider market movements.

Sector and Market Comparison

While HDFC Bank’s stock has underperformed slightly in the last session, the private sector banking sector has shown modest resilience with a 0.24% gain. The Sensex’s marginal 0.07% rise further underscores a cautious but stable market environment. However, the divergence between the underlying stock’s performance and the put option activity suggests that investors are bracing for potential volatility or a correction that may not yet be fully reflected in the spot price.

Investor Takeaway

For investors, the surge in put option activity at strike prices near the current market level is a clear signal to reassess risk exposure in HDFC Bank. The stock’s technical weakness, combined with a downgrade in analyst sentiment and falling investor participation, suggests that downside risks are being priced in by sophisticated market participants.

Those holding long positions may consider protective hedging strategies, while cautious traders might wait for clearer signs of support before initiating fresh buys. Conversely, speculative investors could view the elevated put volumes as an opportunity to capitalise on potential volatility, provided they manage risk carefully.

Given the bank’s systemic importance and large market capitalisation, any significant price movement could have ripple effects across the private banking sector and broader market indices.

Expiry Patterns and Outlook

The 24 February 2026 expiry date is pivotal, with the bulk of put option contracts concentrated at strikes just below the current price. This expiry could act as a catalyst for price discovery, as option writers and holders adjust positions in response to market developments. Monitoring open interest changes and volume trends in the coming sessions will be crucial to gauge whether bearish sentiment intensifies or dissipates.

Overall, the options market activity paints a picture of heightened caution and hedging, reflecting a market environment where investors are preparing for potential downside while balancing the bank’s fundamental strengths.

Conclusion

HDFC Bank’s recent surge in put option trading, combined with technical weakness and a downgrade in analyst ratings, underscores a growing bearish sentiment among investors. The concentration of put contracts near the ₹900-₹910 strike prices ahead of the 24 February expiry highlights a critical support zone and a market bracing for volatility. While the bank remains a large-cap heavyweight in the private sector banking space, current market signals advise prudence and careful risk management for investors navigating this environment.

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