Hindustan Aeronautics Ltd Sees Surge in Put Option Activity Amid Bearish Market Sentiment

Put Option Activity Highlights Growing Bearish Positioning

On 2 February 2026, HAL emerged as the most active stock in put options, with 4,741 contracts traded at the 4,200 strike price for the 24 February expiry. This activity generated a turnover of ₹979.96 lakhs, reflecting substantial investor interest in downside protection or speculative bearish bets. The open interest at this strike stands at 2,113 contracts, indicating that a sizeable number of traders are maintaining or building positions anticipating a decline below this level.

The underlying stock price was ₹4,236 at the time, just above the 4,200 strike, suggesting that the put options are positioned close to the money. This proximity often indicates hedging strategies by existing shareholders or speculative plays by traders expecting a near-term correction.

Stock Performance and Technical Weakness

HAL’s recent price action corroborates the bearish tone from the options market. The stock has declined by 3.09% on the day, underperforming the Aerospace & Defence sector which gained 0.38%, and the Sensex which rose 0.16%. Over the past two trading sessions, HAL has lost 8.33% in value, marking a consecutive fall that has intensified investor concerns.

Intraday, the stock touched a low of ₹4,207.1, down 3.88%, with the weighted average traded price skewed towards the lower end of the day’s range. This suggests selling pressure dominated trading, especially near the 4,200 level, which aligns with the strike price attracting heavy put option interest.

Technically, HAL is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a sustained downtrend. The breach of these support levels often triggers further selling, as short-term traders and algorithmic systems react to negative momentum.

Investor Participation and Liquidity Considerations

Investor participation has notably increased, with delivery volumes rising to 8.25 lakh shares on 30 January 2026, a 44.51% increase over the five-day average. This surge in delivery volume indicates that more investors are committing to their positions, either by offloading shares or establishing fresh bets.

Liquidity remains robust, with the stock’s average traded value supporting trade sizes up to ₹19.24 crores based on 2% of the five-day average. This liquidity facilitates active options trading and allows institutional players to execute sizeable hedging or speculative strategies without excessive market impact.

Mojo Score and Analyst Ratings Reflect Caution

HAL’s current Mojo Score stands at 44.0, categorised as a Sell rating, a downgrade from its previous Hold status as of 27 January 2026. This shift reflects deteriorating fundamentals or technical outlooks as assessed by MarketsMOJO’s proprietary scoring system. The company’s market capitalisation remains substantial at ₹2,88,887 crores, placing it firmly in the large-cap category, but the low Market Cap Grade of 1 indicates limited upside potential relative to peers.

Such a downgrade often influences institutional and retail investor sentiment, potentially accelerating selling pressure and increasing demand for downside protection through put options.

Expiry Patterns and Strategic Implications

The 24 February 2026 expiry is attracting significant attention, with the 4,200 strike price serving as a critical level for option traders. The concentration of put contracts at this strike suggests that investors are positioning for a possible test or breach of this support level within the next three weeks.

Put options at this strike can serve dual purposes: hedging existing long stock positions against further declines or speculating on a downward move. The sizeable open interest and turnover imply that both strategies are in play, reflecting a cautious or bearish market stance towards HAL in the near term.

Investors should monitor open interest changes and price action closely as expiry approaches, as shifts in these metrics can signal evolving market expectations and potential volatility.

Contextualising HAL’s Performance Within the Aerospace & Defence Sector

Compared to its sector peers, HAL’s recent underperformance is notable. While the Aerospace & Defence sector recorded a modest gain of 0.38% on the day, HAL declined by over 3%. This divergence highlights company-specific concerns or profit-taking that may not be affecting the broader sector.

Given the sector’s strategic importance and government contracts, investors often weigh geopolitical and defence budget factors alongside technical signals. However, the current technical weakness and option market positioning suggest that near-term headwinds may outweigh sector tailwinds for HAL.

Investor Takeaways and Strategic Considerations

For investors holding HAL shares, the surge in put option activity at the 4,200 strike price and the stock’s technical breakdown below key moving averages signal a need for caution. Hedging strategies using puts could mitigate downside risk amid heightened volatility.

Speculators may view the current environment as an opportunity to capitalise on potential declines, but should remain vigilant to sudden reversals or news-driven rallies that could alter market dynamics.

Long-term investors should consider the recent downgrade in Mojo Grade and monitor fundamental developments closely, as the current bearish positioning may reflect underlying challenges in the company’s outlook or valuation.

Overall, the option market data combined with price action and analyst ratings paint a picture of increased risk and uncertainty for Hindustan Aeronautics Ltd in the coming weeks.

Conclusion

Hindustan Aeronautics Ltd’s elevated put option volumes and open interest at the 4,200 strike price ahead of the 24 February expiry underscore a growing bearish sentiment among market participants. The stock’s underperformance relative to its sector and key technical breakdowns reinforce this cautious outlook. Investors and traders should closely monitor evolving option market trends and price movements to navigate the risks and opportunities presented by this aerospace and defence heavyweight.

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