HDFC Bank Sees Surge in Call Option Activity Amid Bearish Price Momentum

Call Option Activity Highlights

On 19 February 2026, HDFC Bank's call options with a strike price of ₹930 expiring on 24 February 2026 emerged as the most actively traded contracts in the segment. A total of 18,122 contracts changed hands, generating a turnover of approximately ₹370.78 lakhs. Open interest for these contracts stands at 9,637, indicating sustained interest and potential build-up of bullish positions despite the stock trading below this strike price.

The underlying stock closed at ₹921.10, slightly below the ₹930 strike, suggesting that traders are betting on a rebound or a sharp move upwards within the coming week. This activity is notable given the stock's recent performance and technical indicators.

Stock Performance and Technical Context

HDFC Bank has been under pressure in recent sessions, recording a three-day consecutive decline with a cumulative loss of 0.59%. The stock's 1-day return on 19 February was -0.37%, outperforming the private sector banking sector's decline of 0.88% and the broader Sensex's fall of 0.85%. However, the stock remains below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a bearish technical setup.

Investor participation has also waned, with delivery volume on 18 February falling sharply by 64.58% compared to the 5-day average, down to 76.45 lakh shares. This decline in delivery volume suggests reduced conviction among long-term holders, potentially increasing volatility in the near term.

Fundamental and Rating Update

On 9 February 2026, HDFC Bank's mojo grade was downgraded from Hold to Sell, reflecting concerns over valuation and near-term growth prospects. The bank's mojo score currently stands at 48.0, indicating a cautious stance. Market cap grade remains at 1, underscoring its status as a large-cap stock with significant market presence but limited upside momentum in the immediate term.

Despite the downgrade, the bank's market capitalisation remains robust at ₹14,18,628 crores, affirming its position as a heavyweight in the private sector banking space. The downgrade and technical weakness have likely contributed to the mixed sentiment observed in the options market.

Investor Sentiment and Expiry Dynamics

The concentration of call option trades at the ₹930 strike price, which is slightly out-of-the-money relative to the current stock price, suggests that traders are positioning for a potential rebound or volatility spike before the weekly expiry. The open interest of 9,637 contracts further supports the view that market participants are actively hedging or speculating on a near-term upside move.

Given the expiry date of 24 February 2026, the coming days will be critical in determining whether the stock can break above this strike price. The options market activity may also reflect hedging strategies by institutional investors or arbitrageurs anticipating a volatility event or corporate announcement.

Liquidity and Trading Viability

HDFC Bank remains a highly liquid stock, with a 5-day average traded value sufficient to support trade sizes up to ₹55.47 crores based on 2% of average traded value. This liquidity facilitates active options trading and allows institutional players to enter and exit positions with relative ease.

However, the recent decline in delivery volume and the stock trading below all major moving averages indicate that investors should exercise caution. The current market environment suggests a tug-of-war between bearish technical signals and bullish speculative positioning in the options market.

Comparative Sector and Market Context

Within the private sector banking industry, HDFC Bank's recent underperformance contrasts with some peers that have shown relative resilience. The sector's 1-day return of -0.88% on 19 February 2026 was steeper than HDFC Bank's decline, indicating that the bank has marginally outperformed its immediate competitors despite the negative trend.

Nonetheless, the downgrade to a Sell mojo grade and the stock's technical weakness suggest that investors may prefer to explore alternative banking stocks or sectors with stronger momentum and fundamentals.

Outlook and Investor Considerations

For investors, the current surge in call option activity at the ₹930 strike price presents a nuanced picture. While the options market reflects some bullish speculation, the underlying stock's technical and fundamental indicators remain subdued. The downgrade to Sell and the stock's position below all key moving averages caution against aggressive long positions at this stage.

Investors should monitor the stock's price action closely in the days leading up to the 24 February expiry, paying attention to changes in open interest and volume in both the options and cash markets. A decisive break above the ₹930 level could validate the bullish positioning, while failure to do so may reinforce the bearish outlook.

Given the bank's large market capitalisation and liquidity, it remains a key stock for institutional and retail investors alike, but current signals suggest a period of consolidation or correction may be underway.

Summary

HDFC Bank Ltd. is currently navigating a challenging phase marked by a downgrade in mojo rating, technical weakness, and falling investor participation. Despite this, the options market reveals heightened call option activity at the ₹930 strike price, indicating speculative bullish bets ahead of the weekly expiry. Investors should weigh these conflicting signals carefully and consider broader sector dynamics and technical trends before making investment decisions.

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