HDFC Bank Sees Surge in Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

On 1 February 2026, HDFC Bank Ltd. (NSE: HDFCBANK) recorded the highest volume of put option contracts traded among private sector banks, with 8,374 contracts changing hands at the ₹930 strike price. This strike price closely aligns with the current underlying value of ₹930.20, indicating that traders are positioning for potential downside or protection against near-term declines.

The turnover for these put options reached ₹735.07 lakhs, underscoring significant investor interest in downside protection. Open interest at this strike stands at 4,386 contracts, suggesting that a substantial number of positions remain open and could influence price dynamics as expiry approaches.

Price and Technical Context

Despite the increased put activity, HDFC Bank’s stock price has outperformed its sector by 0.6% on the day, though it has experienced a consecutive two-day decline totalling a -0.77% return. The stock’s price currently trades above its 5-day moving average but remains below its 20-day, 50-day, 100-day, and 200-day moving averages, signalling a mixed technical picture with short-term resilience but longer-term pressure.

Investor participation appears to be waning, with delivery volume on 30 January falling by 10.36% compared to the five-day average, indicating reduced conviction among buyers. However, liquidity remains robust, with the stock’s traded value supporting sizeable trades up to ₹68.39 crores without significant market impact.

Mojo Score and Market Sentiment

HDFC Bank’s current Mojo Score stands at 48.0, categorised as a Sell rating by MarketsMOJO, a downgrade from its previous Hold grade as of 28 January 2026. The bank’s market capitalisation remains substantial at ₹14,38,595 crores, placing it firmly in the large-cap segment. The downgrade reflects deteriorating fundamentals or technical signals that have prompted a more cautious stance among analysts and investors alike.

Expiry Patterns and Investor Positioning

The 24 February 2026 expiry date is attracting significant attention, with the ₹930 put strike price emerging as a focal point for hedging strategies. The concentration of open interest at this strike suggests that investors are bracing for potential volatility or downside risk in the near term. This pattern is consistent with a cautious outlook, possibly driven by macroeconomic uncertainties or sector-specific challenges.

Put options are commonly used either as outright bearish bets or as insurance against declines in underlying holdings. The elevated put volume relative to call options indicates a skew towards protective or speculative bearish positioning. Given HDFC Bank’s recent technical weakness and the downgrade in its Mojo Grade, market participants appear to be hedging against further downside or positioning for a correction.

Comparative Sector and Market Performance

On the day, HDFC Bank’s stock declined by 0.16%, outperforming the private sector bank sector’s 0.72% fall and the broader Sensex’s 1.03% decline. This relative outperformance amid a bearish options backdrop highlights a nuanced market view where investors may be selectively hedging rather than outright selling the stock.

The bank’s liquidity profile supports active trading, which is crucial for options market efficiency and accurate price discovery. The combination of high liquidity and significant put option activity suggests that institutional investors and traders are actively managing risk exposure in this large-cap banking stock.

Implications for Investors

For investors, the surge in put option activity at the ₹930 strike price ahead of the 24 February expiry serves as a cautionary signal. While the stock has shown resilience relative to its sector and the broader market, the technical indicators and downgrade in Mojo Grade suggest that downside risks are being actively priced in.

Investors holding HDFC Bank shares may consider reviewing their portfolios to assess risk exposure, particularly in light of the recent two-day decline and the stock’s position below key moving averages. The elevated put open interest could also imply increased volatility in the coming weeks, warranting close monitoring of price action and market sentiment.

Conversely, traders with a bullish outlook might view the current put-heavy positioning as a contrarian opportunity, especially if broader banking sector fundamentals improve or if the stock manages to reclaim its longer-term moving averages.

Outlook and Conclusion

HDFC Bank Ltd.’s options market activity reveals a complex interplay of hedging and bearish sentiment as investors prepare for near-term uncertainties. The concentration of put contracts at the ₹930 strike price and the approaching expiry date highlight a market bracing for potential downside or volatility.

Given the bank’s large-cap status, significant market cap, and liquidity, these developments are closely watched by institutional investors and market analysts. The downgrade to a Sell Mojo Grade further underscores the need for caution, although the stock’s relative outperformance suggests that the bearish sentiment is not yet overwhelming.

Ultimately, the evolving options landscape around HDFC Bank will remain a key barometer of investor sentiment and risk appetite in the private sector banking space over the coming weeks.

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