HDFC Bank Sees Robust Call Option Activity Ahead of December Expiry

Call Option Activity Highlights

Data from the derivatives segment reveals that HDFC Bank's call options expiring on 30 December 2025 have been among the most actively traded contracts. The call option with a strike price of ₹990 recorded 4,121 contracts traded, generating a turnover of approximately ₹43.59 crores. Meanwhile, the ₹1,000 strike call option saw even higher activity, with 5,451 contracts changing hands and a turnover of ₹42.45 crores. Open interest figures further underscore the interest in these strikes, with 2,139 contracts outstanding at the ₹990 level and a substantial 6,944 contracts at the ₹1,000 strike.

The underlying value of HDFC Bank shares stood at ₹986.90 at the time of this data snapshot, placing the ₹990 and ₹1,000 strike prices close to at-the-money levels. This proximity often attracts speculative and hedging activity, as traders anticipate potential upward movement or seek to capitalise on volatility ahead of expiry.

Price and Market Context

HDFC Bank's stock price has been navigating a narrow trading range recently, with a daily range of just ₹6.8. The share price is approximately 3.14% away from its 52-week high of ₹1,020.50, indicating that the stock remains near its peak levels over the past year. However, the stock has recorded a three-day consecutive decline, with a cumulative return of -1.99% during this period. On the day in question, the stock's return was -1.51%, underperforming both its sector, which fell by -0.78%, and the broader Sensex index, which declined by -0.31%.

Technical indicators show that the stock price is positioned above its 50-day, 100-day, and 200-day moving averages, suggesting a longer-term upward trend. However, it trades below its 5-day and 20-day moving averages, reflecting some short-term weakness or consolidation. Investor participation has also shown signs of moderation, with delivery volume on 1 December recorded at 1.06 crore shares, representing a 33.03% decline compared to the five-day average delivery volume.

Liquidity remains adequate for sizeable trades, with the stock's traded value supporting transaction sizes up to ₹43.19 crores based on 2% of the five-day average traded value. This level of liquidity is important for institutional investors and traders looking to execute large orders without significant market impact.

Investor Positioning and Expiry Patterns

The concentration of open interest at the ₹1,000 strike price suggests that traders are positioning for a potential move above this level by the end of December. The high open interest at this strike also indicates that many market participants may be using these options for hedging or speculative purposes, anticipating either a breakout or a consolidation near this price point.

Expiry patterns in the options market often provide insights into market expectations. The December expiry is a critical date for many traders, as it marks the end of the calendar year and often coincides with portfolio rebalancing and year-end adjustments. The active trading in HDFC Bank's call options with strikes close to the current market price reflects a cautious optimism, with participants seeking to benefit from any positive momentum while managing risk.

Sector and Market Comparison

Within the private sector banking industry, HDFC Bank remains one of the most liquid and widely traded stocks. Its market capitalisation stands at approximately ₹15,18,253.80 crores, categorising it firmly as a large-cap stock. Despite the recent short-term price softness, the bank's shares continue to command significant investor interest relative to peers, as evidenced by the options market activity and trading volumes.

Comparatively, the sector's one-day return of -0.78% and the Sensex's -0.31% return indicate that HDFC Bank's performance has been somewhat more volatile in the immediate term. This volatility may be contributing to the heightened options activity, as traders seek to capitalise on price swings or hedge existing positions.

Outlook and Considerations for Investors

While the recent three-day decline in HDFC Bank's share price may give pause to some investors, the sustained interest in call options near the ₹1,000 strike price suggests that market participants are maintaining a cautiously optimistic stance. The stock's position above key moving averages supports a longer-term positive trend, even as short-term indicators reflect some consolidation.

Investors should also note the reduced delivery volumes, which may indicate a temporary pullback in investor participation. However, the stock's liquidity remains sufficient to accommodate large trades, an important factor for institutional investors and traders alike.

As the 30 December expiry approaches, monitoring the open interest and volume trends in HDFC Bank's options will provide valuable insights into evolving market sentiment. The concentration of activity in call options close to the current market price highlights the importance of this expiry period for the stock's near-term trajectory.

Summary

HDFC Bank's options market activity ahead of the December expiry reveals a significant focus on call options with strike prices near the current share price. This activity, combined with the stock's technical positioning and market context, suggests that traders are positioning for potential upward movement while managing risk amid recent price fluctuations. The bank's status as a large-cap leader in the private sector banking space continues to attract substantial investor interest, both in the cash and derivatives markets.

Market participants and investors are advised to keep a close watch on the evolving options data and price action as the expiry date nears, to better understand the underlying sentiment and potential price movements in HDFC Bank shares.

Limited Time Only! Upgrade now and get 1 Year of Stock of the week worth Rs. 14,999 for FREE. Don't miss out on this exclusive offer. Claim Your Free Year →