HDFC Bank Sees Robust Call Option Activity Amid Mixed Market Signals

Robust Call Option Volumes Highlight Investor Interest

Data from the latest trading session shows that HDFC Bank’s call options expiring on 24 February 2026 have attracted significant volumes, particularly at strike prices of ₹950, ₹960, and ₹1000. The most actively traded call option was at the ₹950 strike, with 11,816 contracts changing hands, generating a turnover of ₹1155.49 lakhs and an open interest of 9,720 contracts. This level is just marginally above the bank’s current underlying value of ₹947.60, indicating that traders are positioning for a near-term rally above this threshold.

Close behind, the ₹960 strike call saw 6,434 contracts traded, with a turnover of ₹458.26 lakhs and open interest standing at 3,444 contracts. The ₹1000 strike call, representing a more ambitious target, recorded 6,330 contracts traded and a turnover of ₹135.08 lakhs, with open interest at 9,598 contracts. The substantial open interest at this higher strike price suggests that a sizeable cohort of investors is betting on a strong upward move in the stock price within the next three weeks.

Price Action and Technical Context

On the price front, HDFC Bank has been on a modest upward trajectory, gaining 2.97% over the past two days and opening with a 6% gap up on the day of reporting. The stock touched an intraday high of ₹994, marking a 7.1% increase from its previous close. However, the weighted average price indicates that most volume traded closer to the day’s low, suggesting some resistance at higher levels.

Technically, the stock is trading above its 5-day and 20-day moving averages but remains below its 50-day, 100-day, and 200-day averages. This mixed technical picture points to a short-term bullish momentum that is yet to be confirmed by longer-term trend indicators. The private banking sector, by comparison, has gained 2.77% on the day, slightly outperforming HDFC Bank’s 2.12% return, while the broader Sensex rose 2.56%.

Investor Participation and Liquidity Considerations

Despite the recent gains, investor participation appears to be waning, with delivery volumes falling by 23.3% against the five-day average, registering 1.84 crore shares on 2 February 2026. This decline in delivery volume may indicate some hesitation among long-term investors, even as short-term traders ramp up activity in the options market.

Liquidity remains adequate for sizeable trades, with the stock’s traded value representing approximately 2% of its five-day average, equating to a trade size capacity of ₹54.53 crore. This level of liquidity supports active trading in both the cash and derivatives segments, facilitating the observed surge in call option volumes.

Mojo Score and Analyst Ratings Reflect Caution

HDFC Bank currently holds a Mojo Score of 48.0, categorised as a Sell rating, a downgrade from its previous Hold status as of 28 January 2026. This shift reflects a more cautious stance from analysts, who have noted the bank’s recent underperformance relative to its sector and broader market indices. The bank’s market capitalisation remains robust at ₹14,58,405.76 crore, firmly placing it in the large-cap category, but the Market Cap Grade of 1 indicates limited upside potential based on current valuations.

The downgrade and relatively low Mojo Score contrast with the bullish positioning evident in the options market, suggesting a divergence between fundamental analyst views and speculative trader sentiment. This divergence may be driven by expectations of short-term catalysts or technical rebounds rather than sustained fundamental improvements.

Expiry Patterns and Strategic Implications

The expiry date of 24 February 2026 is less than a month away, intensifying the focus on near-term price movements. The concentration of call option activity at strikes close to and above the current price level indicates that traders are positioning for a potential breakout above ₹950 and possibly towards the ₹1000 mark. Such a move would represent a significant rally of approximately 5.5% to 6.0% from the current underlying value.

However, the relatively high open interest at these strikes also implies that a large number of contracts remain outstanding, which could lead to increased volatility as expiry approaches. Traders should be mindful of the potential for price swings driven by option expiry dynamics, including unwinding of positions and hedging activity by market makers.

Sector and Market Context

The private banking sector has shown resilience, gaining 2.77% on the day, supported by positive macroeconomic indicators and steady credit growth expectations. HDFC Bank’s slight underperformance relative to its sector peers may reflect company-specific concerns or profit-taking after recent gains. The broader market, represented by the Sensex, has also advanced by 2.56%, indicating a generally positive risk appetite among investors.

Given this backdrop, the surge in call option volumes on HDFC Bank could be interpreted as speculative positioning by traders seeking to capitalise on short-term momentum rather than a broad-based endorsement of the bank’s fundamentals. Investors should weigh these factors carefully when considering exposure to the stock or its derivatives.

Investor Takeaway

HDFC Bank’s recent call option activity highlights a market segment that is optimistic about the bank’s near-term prospects, despite a cautious fundamental outlook. The concentration of trades at strike prices near ₹950 and above suggests that traders are anticipating a rally that could push the stock price closer to the ₹1000 mark by expiry.

However, the downgrade to a Sell rating and the bank’s underperformance relative to its sector and the Sensex counsel prudence. Investors should consider the mixed signals from technical indicators, declining delivery volumes, and the potential for volatility as expiry approaches before making directional bets.

For those looking to capitalise on short-term momentum, monitoring open interest changes and price action around key strike prices will be crucial. Meanwhile, long-term investors may wish to await clearer fundamental improvements or more favourable analyst revisions before increasing exposure.

Summary

In summary, HDFC Bank Ltd. is currently at a crossroads, with active call option trading signalling bullish sentiment among traders, while fundamental assessments remain guarded. The interplay of these factors will shape the stock’s trajectory in the coming weeks, making it a focal point for both derivatives traders and equity investors alike.

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