HDFC Bank Sees Heavy Put Option Activity Ahead of December Expiry

Put Option Activity and Market Positioning

Data from recent trading sessions reveals that HDFC Bank's put options with a strike price of ₹990 have been the most actively traded contracts. A total of 4,041 contracts exchanged hands, generating a turnover of approximately ₹291.6 lakhs. The open interest for these contracts stands at 2,873, indicating a substantial volume of outstanding positions yet to be settled.

The underlying stock price at the time of this activity was ₹992.7, placing the ₹990 strike price close to the current market value. This proximity suggests that market participants are positioning themselves around a critical support level, possibly anticipating volatility or downside risk in the near term.

Expiry Patterns and Investor Behaviour

The expiry date of 30 December 2025 is a key factor driving this concentrated put option activity. As the year-end approaches, investors often adjust their portfolios to manage risk or capitalise on expected market movements. The concentration of put contracts at the ₹990 strike price may reflect a hedging approach against potential declines or a bearish stance on the stock’s short-term trajectory.

Such activity is not uncommon in large-cap banking stocks, where institutional investors and traders use options to fine-tune exposure amid evolving economic conditions and regulatory developments. The open interest figures suggest that a significant number of market participants are maintaining these positions, which could influence price dynamics as expiry nears.

Price and Volume Context

HDFC Bank’s stock price is currently 2.84% away from its 52-week high of ₹1,020.5, indicating a relatively strong performance over the past year. On 2 December, the delivery volume rose to 1.83 crore shares, marking a 37.57% increase compared to the five-day average delivery volume. This rise in investor participation underscores heightened interest in the stock amid the options activity.

Trading volumes and liquidity metrics further support the stock’s active status. The stock’s liquidity, based on 2% of the five-day average traded value, is sufficient to accommodate trade sizes of up to ₹44.05 crore, making it accessible for large institutional trades and derivative transactions.

Technical Indicators and Trend Analysis

From a technical perspective, HDFC Bank’s share price is positioned above its 50-day, 100-day, and 200-day moving averages, signalling a medium- to long-term upward trend. However, it remains below the 5-day and 20-day moving averages, which may indicate some short-term consolidation or hesitation among traders.

The stock has recently reversed its trend after three consecutive days of decline, suggesting renewed buying interest or profit-taking dynamics. The narrow trading range of ₹7.5 points during this period reflects a phase of relative price stability, which often precedes a breakout or breakdown depending on market sentiment.

Sector and Market Comparison

In comparison to its sector and broader market indices, HDFC Bank’s one-day return of 0.37% outpaces the private sector banking sector’s 0.08% gain and contrasts with the Sensex’s decline of 0.34% on the same day. This relative strength highlights the stock’s resilience amid mixed market conditions and may explain the active options positioning as investors seek to capitalise on or protect against potential movements.

With a market capitalisation of ₹15,22,561 crore, HDFC Bank remains one of the largest private sector banks in India, attracting significant institutional and retail investor interest. The stock’s liquidity and trading volumes support its status as a key market bellwether.

Implications for Investors and Traders

The pronounced put option activity at the ₹990 strike price ahead of the December expiry suggests that market participants are either hedging existing long positions or speculating on a potential price correction. Put options serve as insurance against downside risk, and the volume and open interest figures indicate a sizeable commitment to this strategy.

Investors should consider the broader market context, including sector trends and macroeconomic factors, when interpreting this options data. While the stock remains close to its yearly highs and exhibits technical strength over longer timeframes, short-term volatility cannot be ruled out given the concentrated put option interest.

For traders, the liquidity and active options market provide opportunities to implement various strategies, including spreads and protective puts, to manage risk or capitalise on anticipated price movements. Monitoring changes in open interest and strike price concentrations in the coming days will be crucial to gauge evolving market sentiment.

Outlook and Market Sentiment

HDFC Bank’s position as a large-cap private sector bank with robust market participation ensures it remains a focal point for derivative traders and investors alike. The current options activity reflects a nuanced market assessment, balancing optimism from the stock’s proximity to its 52-week high with caution expressed through put option hedging.

As the 30 December expiry approaches, shifts in open interest and trading volumes will provide further insight into investor expectations. Market participants will be watching closely for any signs of trend continuation or reversal, informed by both technical indicators and fundamental developments within the banking sector.

Conclusion

The surge in put option trading for HDFC Bank at the ₹990 strike price ahead of the December expiry highlights a significant degree of bearish positioning or risk management among investors. Coupled with the stock’s technical setup and relative market performance, this activity underscores the complex dynamics at play in one of India’s most prominent banking stocks.

Investors and traders should remain attentive to evolving option market data and price action to navigate potential volatility and make informed decisions in the weeks ahead.

Get 1 year of Weekly Picks FREE when you subscribe to MojoOne. Offer ends soon. Start Saving Now →