HDFC Bank Sees Surge in Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

Data from the derivatives market reveals that put options with strike prices of ₹1,000 and ₹990 have been the most actively traded contracts for HDFC Bank. Specifically, the ₹1,000 strike put saw 942 contracts traded, generating a turnover of approximately ₹90.6 lakhs, while the ₹990 strike put recorded 1,193 contracts traded with a turnover of ₹85.7 lakhs. Open interest for these strikes stands at 3,092 and 1,669 contracts respectively, indicating significant outstanding positions that could influence price movements as expiry nears.

The underlying stock price closed at ₹989.1, just 3.03% shy of its 52-week high of ₹1,020.5. This proximity to the peak suggests that while the stock has been resilient, traders are increasingly positioning for potential downside or volatility in the near term.

Price and Volume Dynamics

HDFC Bank’s stock has experienced a mild correction over the past four trading sessions, losing 0.67% cumulatively. The stock traded within a narrow range of ₹5.6, reflecting a period of consolidation. Notably, the stock remains above its 100-day and 200-day moving averages, signalling a longer-term uptrend, but is currently below its 5-day, 20-day, and 50-day averages, which may indicate short-term weakness.

Investor participation has risen sharply, with delivery volumes on 30 December reaching 2.27 crore shares — an increase of 183.52% compared to the five-day average. This heightened activity underscores growing market interest and possibly increased hedging or speculative positioning ahead of the expiry.

Liquidity remains robust, with the stock’s average traded value supporting trade sizes up to ₹35.57 crore comfortably, ensuring that option and stock traders can execute sizeable positions without significant market impact.

Bearish Positioning and Hedging Implications

The concentration of put option activity at strike prices slightly above and below the current market price suggests that traders are either hedging existing long positions or speculating on a potential pullback. The ₹1,000 strike, being just above the current price, is a common level for protective puts, while the ₹990 strike reflects a more immediate downside target.

Open interest data indicates that these positions are not merely speculative but represent substantial hedging interest. The sizeable open interest at these strikes could lead to increased volatility as market makers adjust their hedges in response to price movements, especially as the expiry date approaches.

Comparative Sector and Market Context

HDFC Bank’s performance today was largely in line with its sector, the private sector banking space, which recorded a modest 0.18% gain. The broader Sensex index also advanced by 0.17%, highlighting a generally stable market environment. Despite this, the bank’s slight decline of 0.07% and the put option activity point to a cautious stance among investors.

With a market capitalisation of ₹15,24,150 crore, HDFC Bank remains a heavyweight in the large-cap segment. Its Mojo Score of 72.0 and a current Mojo Grade of Buy, downgraded from Strong Buy on 22 December 2025, reflect a tempered but positive outlook from MarketsMOJO’s analytical framework. This downgrade may have contributed to the increased hedging activity observed in the options market.

Expiry Patterns and Strategic Considerations

The January 27, 2026 expiry is a critical date for options traders, as positions will be squared off or rolled over. The high open interest in puts at the ₹1,000 and ₹990 strikes suggests that traders are preparing for potential downside risk or volatility around this timeframe. Investors holding long positions in HDFC Bank shares might be using these puts as insurance against a correction, while speculators could be betting on a near-term dip.

Given the stock’s proximity to its 52-week high and the recent four-day losing streak, the market appears to be balancing optimism with caution. The interplay between technical support levels, moving averages, and option market positioning will be key to watch in the coming weeks.

Outlook for Investors

For investors, the current scenario presents both opportunities and risks. The stock’s strong market capitalisation and favourable long-term moving averages support a bullish case. However, the recent downgrade in Mojo Grade and the surge in put option activity signal that caution is warranted in the short term.

Traders should monitor the evolving open interest and volume patterns in the options market, as these can provide early indications of shifts in sentiment. Additionally, the stock’s ability to hold above key support levels near ₹985-₹990 will be critical in determining whether the recent weakness is a temporary consolidation or the start of a deeper correction.

In summary, HDFC Bank’s options market activity ahead of the January expiry reveals a nuanced picture of investor sentiment, blending optimism with prudent risk management. This dynamic will likely continue to influence price action and trading strategies in the weeks ahead.

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