Rs 670 to Rs 720 Puts Draw Over 18,000 Contracts on HDFC Bank Ltd. Ahead of September Expiry

Put Options Event and Cash Market Context

The 29 September expiry saw significant put option turnover on HDFC Bank Ltd., with the Rs 670 strike recording 2,536 contracts traded, Rs 680 at 3,804 contracts, Rs 690 at 3,522 contracts, Rs 710 at 5,116 contracts, and Rs 720 at 3,688 contracts. This totals 18,666 contracts, representing a substantial volume for a single expiry. The combined turnover for these strikes exceeded ₹1,379 crores, underscoring the scale of activity.

The stock closed at Rs 701.8, down 1.03% on the day and trading just 0.08% above its 52-week low of Rs 704.15. Notably, HDFC Bank Ltd. has been losing ground for two consecutive sessions, falling 2.17% over that period. The stock is trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling a bearish technical backdrop. HDFC Bank Ltd. also saw a 222.69% rise in delivery volume on 31 August compared to its 5-day average, indicating rising investor participation despite the recent price weakness — does this suggest a shift in conviction or a tactical repositioning?

Strike Price Analysis: Moneyness and Distance from Underlying

The put strikes in focus span from Rs 670 to Rs 720, with the underlying at Rs 701.8. The Rs 670 and Rs 680 puts are out-of-the-money (OTM) by approximately 4.3% and 2.9%, respectively. The Rs 690 strike is slightly out-of-the-money by 1.7%, while the Rs 710 and Rs 720 puts are in-the-money (ITM) by 1.2% and 2.6%, respectively.

This distribution is telling. The concentration of contracts at ITM and near-the-money strikes (Rs 710 and Rs 720) suggests some participants may be positioning for downside risk or employing spread strategies. Meanwhile, the sizeable activity at OTM strikes (Rs 670 to Rs 690) could indicate hedging or speculative bets on a further decline. The Rs 710 strike, with 5,116 contracts traded and an open interest of 9,965, stands out as a focal point for fresh positioning.

Given the stock's proximity to its 52-week low and trading below all major moving averages, the put strikes near and above the current price may reflect a cautious stance — is this protective hedging or directional bearishness?

Interpreting the Put Activity: Bearish, Hedging, or Put Writing?

Put option activity can signal different strategies. Buying OTM puts on a rising stock often indicates hedging, while ATM or ITM put buying on a falling stock tends to be bearish. Put writing, where traders sell puts to collect premium, is generally a bullish stance, expecting the stock to stay above the strike.

In this case, the stock is declining and trading below key moving averages, which aligns with a bearish interpretation for the ITM and ATM put activity at Rs 710 and Rs 720. However, the significant volume at OTM strikes Rs 670 and Rs 680, combined with rising delivery volumes, suggests some investors may be hedging existing long positions against further downside.

Put writing appears less likely here given the high turnover and open interest at ITM strikes, which typically attract buyers rather than sellers. The open interest at Rs 720 is 10,483 contracts, indicating established positions rather than fresh put writing. The ratio of contracts traded to open interest ranges from 0.25 to 0.5 across strikes, suggesting a mix of fresh and existing activity.

Open Interest and Contracts Analysis

The open interest (OI) at the key strikes is substantial: Rs 670 strike has 3,061 contracts, Rs 680 has 8,684, Rs 690 has 5,192, Rs 710 has 9,965, and Rs 720 has 10,483. The Rs 710 and Rs 720 strikes hold the highest OI, indicating these are established levels of interest.

Comparing contracts traded on 1 September to OI, the turnover-to-OI ratio is highest at Rs 710 (0.51) and Rs 720 (0.35), signalling fresh activity or position adjustments at these strikes. The Rs 680 strike also shows a notable ratio of 0.44. This pattern suggests a combination of fresh put buying and some unwinding or rolling of existing positions.

The breadth of strikes with significant OI and volume points to a complex positioning landscape, where some traders may be hedging, others speculating on downside, and a few possibly adjusting spreads. how does this multi-strike activity align with the stock’s technical and fundamental backdrop?

Cash Market Context: Technicals and Delivery Volumes

HDFC Bank Ltd. is currently trading below all major moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day, which is a bearish technical signal. The stock’s recent two-day decline of 2.17% and proximity to its 52-week low reinforce this negative momentum.

However, the delivery volume on 31 August surged by 222.69% compared to the 5-day average, indicating increased investor participation despite the price weakness. This divergence between price and delivery volume may explain why some put activity is protective hedging rather than outright bearish speculation — is the market bracing for a pullback or positioning for a rebound?

Conclusion: A Nuanced Put Activity Reflecting Both Protection and Bearish Positioning

The heavy put option activity on HDFC Bank Ltd. ahead of the 29 September expiry is multifaceted. The concentration of contracts at ITM and ATM strikes Rs 710 and Rs 720, combined with the stock’s technical weakness and recent price decline, points to directional bearish positioning by some market participants.

Simultaneously, the sizeable volume at OTM strikes Rs 670 and Rs 680, alongside rising delivery volumes, suggests a protective hedging element, where investors may be guarding long positions against further downside. Put writing appears less prominent given the turnover and open interest patterns.

This blend of strategies reflects a market grappling with uncertainty — should investors interpret this as a signal to hedge or to reassess their exposure to HDFC Bank Ltd.?

Get 33% Off on our 1 Year Plan - Limited Period Only! Start Today