HDFC Bank Sees Heavy Put Option Activity Amid Narrow Trading Range

Put Option Activity Highlights

On 15 December 2025, HDFC Bank recorded 4,801 put option contracts traded at the ₹990 strike price expiring on 30 December 2025. This volume corresponds to a turnover of approximately ₹20.62 crores, reflecting substantial interest in downside protection or speculative bearish bets. The open interest for these put options stood at 3,524 contracts, indicating a sustained level of outstanding positions that have yet to be closed or exercised.

The underlying stock price at the time was ₹995, placing the ₹990 strike price just below the current market value. This proximity suggests that market participants are positioning for potential downside risk in the near term, possibly as a hedge against recent price fluctuations or broader market uncertainties.

Price and Volume Context

HDFC Bank’s stock price has been trading within a narrow range of ₹7.3, reflecting limited volatility in recent sessions. The stock closed just 2.55% away from its 52-week high of ₹1,020.5, underscoring its relative strength over the past year. Despite this, the stock has experienced a consecutive two-day decline, with a cumulative return of -0.64% during this period.

Investor participation has shown signs of moderation, with delivery volume on 15 December falling to 57.48 lakh shares, a decline of 36.91% compared to the five-day average delivery volume. This reduction in delivery volume may indicate cautious sentiment or profit-booking among shareholders.

From a technical perspective, HDFC Bank’s share price remains above its 50-day, 100-day, and 200-day moving averages, suggesting a longer-term uptrend. However, it is trading below the shorter-term 5-day and 20-day moving averages, which may reflect recent short-term weakness or consolidation.

Market Capitalisation and Sector Performance

With a market capitalisation of approximately ₹15.33 lakh crore, HDFC Bank is classified as a large-cap stock within the private sector banking industry. On the day in question, the stock’s return was marginally negative at -0.05%, outperforming the private sector banking sector’s decline of -0.54% and the broader Sensex index’s fall of -0.46%. This relative outperformance highlights the stock’s resilience amid broader market pressures.

Interpreting the Put Option Interest

The concentration of put option contracts at the ₹990 strike price with expiry at the end of December suggests that investors are actively managing risk ahead of the year-end. Put options serve as a tool for hedging against potential declines or for speculative positioning anticipating a drop in the underlying stock price.

Given that the stock is trading close to its 52-week high, the elevated put option activity may reflect a cautious stance among traders who seek to protect gains or capitalise on short-term volatility. The open interest level further indicates that these positions are not merely transient but represent a meaningful commitment to downside protection.

Liquidity and Trading Capacity

HDFC Bank’s liquidity remains robust, with the stock’s traded value supporting trade sizes up to ₹26.77 crore based on 2% of the five-day average traded value. This liquidity facilitates efficient execution of large trades and options strategies, enabling market participants to implement hedging or speculative positions with relative ease.

The narrow trading range and subdued delivery volumes may also suggest a period of consolidation, where market participants await fresh catalysts or macroeconomic developments before committing to directional bets.

Expiry Patterns and Market Sentiment

The expiry date of 30 December 2025 for the most active put options coincides with the end of the calendar year, a period often marked by portfolio rebalancing and strategic positioning by institutional investors. The clustering of open interest around this expiry suggests that market participants are preparing for potential volatility or reassessing risk exposures as the year closes.

While the stock’s proximity to its yearly high indicates underlying strength, the put option activity reveals a nuanced market sentiment where caution prevails. This duality is common in large-cap banking stocks, which are sensitive to macroeconomic factors such as interest rate changes, credit growth, and regulatory developments.

Broader Implications for Investors

For investors in HDFC Bank, the current options market data provides valuable insight into prevailing risk perceptions. The active put option trading at near-the-money strike prices highlights the importance of monitoring downside risks despite the stock’s overall resilience.

Investors may consider the implications of this activity in the context of their portfolios, particularly if exposure to the banking sector is significant. The combination of a narrow trading range, falling delivery volumes, and concentrated put option interest suggests a period of cautious positioning ahead of year-end.

As always, a comprehensive analysis of fundamentals, technical indicators, and market conditions remains essential for informed decision-making.

Summary

HDFC Bank’s recent put option activity, especially at the ₹990 strike price expiring on 30 December 2025, underscores a notable degree of bearish hedging or speculative interest. The stock’s trading near its 52-week high, coupled with a narrow price range and reduced delivery volumes, paints a picture of cautious investor sentiment. Market participants appear to be balancing optimism about the bank’s long-term prospects with prudent risk management strategies as the year draws to a close.

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