Hindustan Aeronautics Ltd Sees Surge in Call Option Activity Amid Bearish Price Action

Recent Price Performance and Market Context

HAL’s stock price has been under pressure over the past two sessions, registering a cumulative decline of 11.12%. On 5 February 2026, the stock opened with a gap down of 2.28% and touched an intraday low of ₹3,970, representing a 5.86% drop from the previous close. This underperformance is stark when compared to the Aerospace & Defense sector’s 1-day return of -2.26% and the broader Sensex’s marginal fall of 0.47% on the same day.

Technically, HAL is trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling a bearish trend in the short to long term. However, rising investor participation is evident, with delivery volumes on 4 February surging by 228.72% to 27.63 lakh shares compared to the 5-day average. This heightened activity suggests that investors are actively repositioning their holdings amid the recent volatility.

Call Option Activity: Strike Prices and Expiry Patterns

The most active call options for HAL are concentrated around the 24 February 2026 expiry, with four strike prices drawing significant attention: ₹4,000, ₹4,100, ₹4,200, and ₹4,500. The underlying stock price at the time stood at ₹3,982.20, indicating that these strikes are either at-the-money or out-of-the-money, reflecting a bullish sentiment among option traders.

The highest volume of contracts traded was at the ₹4,200 strike, with 5,680 contracts exchanging hands, generating a turnover of ₹881.73 lakh and an open interest of 4,375 contracts. Close behind was the ₹4,000 strike, which saw 4,775 contracts traded, turnover of ₹1,277.36 lakh, and open interest of 2,352 contracts. The ₹4,100 strike also recorded robust activity with 4,168 contracts traded and turnover of ₹870.15 lakh.

Interestingly, the ₹4,500 strike, which is significantly out-of-the-money given the current stock price, still attracted 4,016 contracts with a turnover of ₹243.49 lakh and an open interest of 4,827 contracts. This suggests that some market participants are speculating on a strong upside move in the near term, possibly anticipating positive developments or contract wins in the defence sector.

Investor Positioning and Sentiment Analysis

The surge in call option volumes and open interest at strikes above the current market price indicates a predominantly bullish positioning among traders. Despite the recent price weakness, investors appear to be betting on a recovery or a rally in HAL shares by the February expiry. This could be driven by expectations of government defence orders, strategic partnerships, or favourable policy announcements that typically buoy aerospace and defence stocks.

However, the stock’s Mojo Score of 50.0 and a Mojo Grade of Hold, upgraded from Sell on 3 February 2026, reflect a cautious stance from the analytical perspective. The market cap grade of 1 confirms HAL’s status as a large-cap heavyweight with a market capitalisation of ₹2,82,019 crore, but the current technical and fundamental indicators suggest limited upside momentum in the immediate term.

Comparative Analysis with Sector and Historical Trends

HAL’s recent underperformance relative to its sector peers is notable. The Aerospace & Defense sector has been relatively resilient, with many companies benefiting from increased defence spending and export opportunities. HAL’s two-day consecutive fall of over 11% contrasts with the sector’s more modest declines, suggesting stock-specific factors at play.

Historically, HAL has demonstrated strong resilience and recovery following short-term corrections, often supported by its robust order book and government backing. The current elevated open interest in call options may be a reflection of traders anticipating a similar rebound, positioning themselves ahead of potential positive catalysts.

Liquidity and Trading Dynamics

Liquidity remains adequate for HAL, with the stock’s traded value supporting a trade size of approximately ₹28.63 crore based on 2% of the 5-day average traded value. This ensures that both institutional and retail investors can execute sizeable trades without significant market impact.

The weighted average price of traded shares has been closer to the day’s low, indicating selling pressure during the session. Yet, the rising delivery volumes suggest that some investors are accumulating shares for the longer term, possibly viewing the current dip as a buying opportunity.

Outlook and Investor Takeaways

While the recent price action for HAL has been disappointing, the surge in call option activity at strikes above the current market price signals a cautious optimism among traders. The February expiry will be a critical juncture, with market participants closely watching for any newsflow or developments that could trigger a reversal.

Investors should weigh the technical weakness against the fundamental strengths of HAL, including its large market capitalisation, strategic importance in the defence sector, and government support. The Hold rating and neutral Mojo Score suggest that a wait-and-watch approach may be prudent until clearer directional cues emerge.

For those considering exposure to HAL, monitoring option market activity can provide valuable insights into market sentiment and potential price targets. The elevated open interest and turnover at multiple call strikes indicate that a segment of the market is positioning for a meaningful upside, but this is tempered by the stock’s current downtrend and sector underperformance.

Summary

In summary, Hindustan Aeronautics Ltd is experiencing heightened call option trading activity ahead of the 24 February 2026 expiry, with significant volumes at strike prices ranging from ₹4,000 to ₹4,500. Despite recent price declines and technical weakness, this activity reflects a degree of bullish speculation. Investors should remain cautious, balancing the stock’s fundamental strengths against its recent underperformance and the broader market context.

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