Hero MotoCorp Sees Surge in Call Option Activity Ahead of February Expiry

Robust Call Option Activity Highlights Investor Optimism

On 6 February 2026, Hero MotoCorp witnessed an impressive 9,729 call option contracts traded at the 5,800 strike price, generating a turnover of ₹1426.95 lakhs. The open interest currently stands at 3,526 contracts, reflecting sustained interest in bullish positioning ahead of the February expiry. The underlying stock price closed at ₹5,813.50, marginally above the strike price, indicating that traders are betting on further gains in the coming weeks.

This surge in call option activity is notable given the stock’s recent performance, which outperformed its sector by 1.29% and delivered a 0.81% gain on the day, contrasting with the broader Sensex decline of 0.55% and the sector’s negative return of 0.71%. Such relative strength underscores investor confidence in Hero MotoCorp’s fundamentals and growth prospects.

Technical Landscape: Mixed Signals Amid Uptrend

From a technical standpoint, Hero MotoCorp’s price currently trades above its 5-day, 20-day, 100-day, and 200-day moving averages, signalling a generally positive trend over multiple time horizons. However, it remains below the 50-day moving average, suggesting some near-term resistance that could temper momentum. This technical setup may explain the cautious yet optimistic positioning seen in the options market, where traders are selectively targeting strike prices close to the current market level.

Despite the bullish undertone, delivery volumes have declined sharply, with a 34.87% drop in delivery volume on 5 February compared to the 5-day average. This falling investor participation could indicate profit-booking or a wait-and-watch approach by long-term holders, even as short-term traders ramp up call option bets.

Fundamental Strength and Market Capitalisation

Hero MotoCorp remains a dominant player in the automobile sector, particularly in two and three-wheelers, with a market capitalisation of ₹1,15,257 crores, categorising it as a mid-cap stock. The company’s Mojo Score stands at a healthy 72.0, reflecting a Buy rating, although this represents a slight downgrade from a previous Strong Buy rating issued on 4 February 2026. The downgrade appears to be a recalibration rather than a fundamental deterioration, as the company continues to demonstrate solid earnings growth and market share gains.

Expiry Patterns and Strike Price Concentration

The concentration of call option trades at the 5,800 strike price expiring on 24 February 2026 suggests that traders are positioning for a potential breakout above this level within the next three weeks. This strike price is closely aligned with the current underlying price, making it an attractive target for speculative and hedging strategies alike.

Open interest data corroborates this view, with 3,526 contracts outstanding at this strike, indicating that many investors are holding onto bullish bets rather than closing positions. This persistent open interest can often act as a magnet for price movement, as market makers and traders adjust their hedges accordingly.

Liquidity and Trading Viability

Liquidity remains robust for Hero MotoCorp, with the stock’s traded value averaging sufficient to support trade sizes of up to ₹5.47 crores based on 2% of the 5-day average traded value. This liquidity facilitates active options trading and reduces slippage risk for institutional and retail participants alike.

The stock’s day change of 0.76% on 6 February further reinforces its appeal as a liquid and relatively stable vehicle for bullish option strategies, especially in a market environment where broader indices have shown weakness.

Implications for Investors and Traders

The pronounced call option activity at the 5,800 strike price expiry on 24 February 2026 signals a consensus expectation of upward price movement in Hero MotoCorp over the short term. Investors may interpret this as a confirmation of the company’s resilient fundamentals and sector leadership, especially given the stock’s outperformance relative to its peers and the broader market.

However, the decline in delivery volumes and the technical resistance at the 50-day moving average suggest that caution is warranted. Traders should monitor price action closely around this level and consider the potential for volatility as the expiry date approaches.

For long-term investors, the recent Mojo Score downgrade from Strong Buy to Buy does not materially alter the positive outlook but highlights the importance of ongoing fundamental analysis and market monitoring.

Sector Context and Market Positioning

Within the automobile sector, Hero MotoCorp’s strong market capitalisation and liquidity position it as a key bellwether for two-wheeler demand trends in India. The company’s ability to maintain a Mojo Grade of Buy with a score of 72.0 reflects solid operational performance and growth prospects despite macroeconomic headwinds.

Given the sector’s recent underperformance, Hero MotoCorp’s relative strength and active options market interest may attract further institutional attention, potentially driving additional price momentum in the near term.

Conclusion

Hero MotoCorp Ltd. stands out as a focal point of bullish sentiment in the options market, with significant call option volumes and open interest concentrated at the 5,800 strike price expiring later this month. While technical indicators present a mixed picture, the company’s fundamental strength and market leadership underpin investor optimism.

Market participants should weigh the positive signals from options activity against the cautionary signs from delivery volumes and moving averages. Overall, Hero MotoCorp remains a compelling mid-cap stock within the automobile sector, supported by robust liquidity and expert endorsements.

Upgrade at special rates, valid only for the next few days. Claim Your Special Rate →