HDFC Bank Sees Robust Call Option Activity Ahead of February Expiry

Overview of Call Option Activity

Data from the options market reveals that HDFC Bank’s call options expiring on 24 February 2026 have attracted substantial trading volumes. The most actively traded strike prices are ₹940, ₹930, and ₹950, with the underlying stock price hovering at ₹933.20 as of the latest session. Specifically, the ₹940 strike saw 5,054 contracts traded, generating a turnover of approximately ₹569.56 lakhs and an open interest of 3,949 contracts. The ₹950 strike led in open interest with 7,224 contracts and recorded 5,003 contracts traded, amounting to ₹434.49 lakhs in turnover. Meanwhile, the ₹930 strike price accounted for 3,987 contracts traded and a turnover of ₹560.71 lakhs, with open interest standing at 5,459 contracts.

This concentrated activity around strikes slightly above the current market price suggests that investors are positioning for a moderate upside in the near term. The elevated open interest at the ₹950 strike, in particular, indicates a strong interest in call options that would become profitable if the stock price surpasses this level by expiry.

Price Performance and Technical Context

Despite the bullish positioning in the options market, HDFC Bank’s stock has underperformed its sector by 1.03% on the day, delivering a 0.73% gain compared to the sector’s 1.46% rise. The stock has recorded gains over the last two consecutive sessions, accumulating a 1.71% return during this period. However, it remains below its 20-day, 50-day, 100-day, and 200-day moving averages, though it is trading above the 5-day moving average. This mixed technical picture suggests short-term strength amid longer-term consolidation.

Investor participation has been on the rise, with delivery volumes reaching 2.56 crore shares on 27 January 2026, marking a 1.23% increase over the five-day average delivery volume. Liquidity remains robust, with the stock capable of supporting trade sizes up to ₹72.82 crore based on 2% of the five-day average traded value, making it an attractive option for institutional and retail traders alike.

Mojo Score and Analyst Ratings

HDFC Bank currently holds a Mojo Score of 60.0, categorised as a 'Hold' rating, a downgrade from its previous 'Buy' status as of 12 January 2026. The downgrade reflects a more cautious stance amid evolving market conditions and valuation considerations. The bank’s market cap grade is 1, indicating its status as a large-cap stock with significant market presence and liquidity.

While the downgrade signals tempered expectations, the stock’s fundamentals remain solid, supported by its dominant position in the private banking sector and consistent earnings growth. The mixed technical signals and active options positioning suggest that traders are hedging their bets, anticipating potential volatility but leaning towards a bullish outcome by the February expiry.

Expiry Patterns and Market Sentiment

The clustering of call option activity around the ₹930 to ₹950 strike prices for the 24 February expiry is indicative of market participants’ expectations for a moderate price appreciation over the next month. The open interest data, combined with turnover figures, points to a strategic build-up of bullish positions, possibly reflecting confidence in the bank’s upcoming quarterly results or broader sectoral tailwinds.

It is noteworthy that the highest open interest is at the ₹950 strike, which is approximately 1.8% above the current underlying price. This suggests that traders are positioning for a breakout beyond recent resistance levels, potentially driven by expectations of improved asset quality, credit growth, or margin expansion in the near term.

However, the relatively high open interest at the ₹930 strike also indicates a significant number of traders are hedging or speculating closer to the money, reflecting a balanced view on the stock’s immediate trajectory.

Sectoral and Broader Market Context

HDFC Bank operates within the private sector banking industry, which has been experiencing mixed performance amid macroeconomic uncertainties and regulatory changes. The sector’s 1-day return of 1.46% outpaced HDFC Bank’s 0.73% gain, highlighting some relative underperformance. Meanwhile, the Sensex rose by 0.52%, underscoring broader market resilience.

Given the bank’s large-cap status and significant market influence, its price movements and options activity often serve as a barometer for investor sentiment in the banking sector. The current options market data suggests that while investors remain cautious, there is a clear tilt towards bullish positioning, possibly anticipating positive catalysts in the near future.

Investor Takeaways

For investors and traders, the current call option activity in HDFC Bank offers several insights. The concentration of open interest and turnover at strikes just above the current market price suggests a consensus expectation of moderate upside potential by late February. This could be driven by anticipated positive developments in the bank’s financial performance or broader sectoral improvements.

However, the downgrade to a 'Hold' rating and the stock’s position below key moving averages counsel caution. Investors should weigh the bullish options positioning against the technical and fundamental backdrop, considering risk management strategies accordingly.

Given the stock’s liquidity and active options market, sophisticated investors may find opportunities to structure trades that capitalise on expected volatility or directional moves, while retail investors might prefer to monitor developments closely before committing fresh capital.

Conclusion

HDFC Bank Ltd.’s options market activity ahead of the 24 February 2026 expiry reveals a nuanced picture of investor sentiment. While the stock has underperformed its sector recently, the surge in call option volumes and open interest at strikes near and above the current price signals a cautiously optimistic outlook. The downgrade to a 'Hold' rating tempers enthusiasm but does not negate the bank’s strong fundamentals and market leadership.

As the expiry date approaches, market participants will be closely watching earnings updates, macroeconomic indicators, and sectoral trends to validate or revise their positions. For now, the options market suggests that a moderate rally in HDFC Bank’s stock price remains a plausible scenario, offering potential opportunities for investors aligned with this view.

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