HDFC Bank Sees Surge in Call Option Activity Amid Bearish Technicals

Call Option Activity Highlights

On 19 February 2026, HDFC Bank’s call options with a strike price of ₹920 expiring on 24 February 2026 emerged as the most actively traded contracts. A total of 11,114 contracts exchanged hands, generating a turnover of approximately ₹328.86 lakhs. The open interest for these contracts stood at 5,155, signalling sustained investor interest in this strike price as the expiry date approaches.

The underlying stock price was ₹917.0 on the day, just shy of the ₹920 strike, indicating that traders are positioning for a potential upward move in the near term. This activity suggests a moderately bullish outlook among options traders, who appear to be betting on the stock crossing the ₹920 threshold within the week.

Stock Performance and Technical Indicators

Despite the heightened options activity, HDFC Bank’s stock performance on the day was subdued. The stock recorded a marginal gain of 0.21%, underperforming the private sector banking sector’s 0.49% rise and the Sensex’s 0.55% gain. Notably, the stock has recently reversed a three-day losing streak, hinting at a tentative recovery.

However, technical indicators remain cautious. HDFC Bank is trading below its key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling persistent downward pressure. This technical backdrop tempers the optimism reflected in the call option volumes, suggesting that while some investors anticipate a rebound, broader market sentiment remains guarded.

Investor Participation and Liquidity Considerations

Investor participation has shown signs of waning. Delivery volume on 19 February was 87.59 lakh shares, a sharp decline of 54.89% compared to the five-day average delivery volume. This drop indicates reduced conviction among long-term holders, possibly reflecting uncertainty ahead of the expiry.

Liquidity remains adequate for sizeable trades, with the stock’s traded value supporting transactions up to ₹50.35 crore based on 2% of the five-day average traded value. This liquidity ensures that both institutional and retail investors can execute sizeable positions without significant market impact.

Mojo Score and Analyst Ratings

HDFC Bank currently holds a Mojo Score of 48.0, categorised as a 'Sell' grade, a downgrade from its previous 'Hold' rating as of 9 February 2026. This downgrade reflects concerns over valuation and near-term growth prospects amid a challenging macroeconomic environment. The bank’s market cap grade is 1, indicating its status as a large-cap stock with significant market presence but limited upside potential according to the current assessment.

These ratings provide a cautionary note for investors, especially given the mixed signals from the options market and technical indicators. While call option activity suggests some bullish bets, the fundamental and technical outlook advises prudence.

Expiry Patterns and Strike Price Significance

The concentration of call option trades at the ₹920 strike price, close to the current market price, is a critical indicator of market expectations. Traders appear to be positioning for a breakout above this level before the 24 February expiry, which could trigger further short-term gains if realised.

Open interest data supports this view, with a sizeable number of contracts still outstanding, implying that many investors are holding onto their bullish positions rather than closing them out. This persistence in open interest often precedes significant price movements, making the coming days crucial for HDFC Bank’s stock trajectory.

Sector and Market Context

Within the private sector banking space, HDFC Bank’s performance is slightly lagging behind peers, as evidenced by its underperformance relative to the sector’s 0.49% gain on the day. The broader Sensex’s 0.55% rise further highlights the stock’s relative weakness.

This divergence may be attributed to sector-specific challenges such as credit growth concerns, regulatory pressures, and competitive dynamics. Investors are likely weighing these factors against the bank’s strong franchise and market leadership, resulting in cautious positioning reflected in both stock and options markets.

Investor Takeaways and Outlook

For investors, the current scenario presents a nuanced picture. The surge in call option activity near the ₹920 strike price indicates that a segment of the market is optimistic about a near-term rally. However, the stock’s technical weakness and the downgrade in Mojo Grade counsel caution.

Those considering exposure to HDFC Bank should monitor price action closely around the ₹920 level and watch for confirmation of a sustained breakout above key moving averages. Additionally, the decline in delivery volumes suggests that long-term conviction is lacking, which could limit upside momentum.

Given the bank’s large-cap status and dominant market position, it remains a core holding for many portfolios, but selective entry points and risk management will be essential in navigating the current environment.

Conclusion

HDFC Bank Ltd.’s options market activity ahead of the 24 February expiry reveals a cautious yet optimistic investor base positioning for a potential short-term rebound. While call option volumes and open interest at the ₹920 strike price underscore bullish sentiment, the stock’s technical underperformance and recent downgrade highlight underlying challenges.

Investors should balance these factors carefully, considering both the opportunities and risks inherent in the current market context. As expiry approaches, the stock’s price action will be a key indicator of whether bullish bets materialise or if caution prevails.

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