ICICI Bank Sees Heavy Put Option Activity Amid Bearish Market Sentiment

Intense Put Option Trading Highlights Bearish Sentiment

Data from the options market reveals that ICICI Bank’s put options have been the most actively traded among stocks, with a pronounced concentration of activity at strike prices ranging from ₹1350 to ₹1400. The highest volume was recorded at the ₹1380 strike, where 7,839 contracts changed hands, generating a turnover of approximately ₹1007.47 lakhs. This was closely followed by the ₹1370 strike with 7,460 contracts traded and a turnover of ₹691.92 lakhs.

Other notable strikes include ₹1400 with 5,450 contracts traded (turnover ₹1192.95 lakhs), ₹1360 with 5,972 contracts (turnover ₹386.69 lakhs), and ₹1350 with 6,256 contracts (turnover ₹278.08 lakhs). The open interest figures further underscore the bearish positioning, with the ₹1400 strike holding the highest open interest of 5,641 contracts, indicating sustained investor interest in downside protection or speculative bets on a price decline.

Expiry Patterns and Market Context

All these put options are set to expire on 27 January 2026, a date that is attracting heightened attention from traders and investors alike. The clustering of open interest and trading volumes near the current underlying value of ₹1370.6 suggests that market participants are positioning themselves for potential downside moves in the near term. This pattern often reflects hedging strategies by institutional investors seeking to protect long positions or speculative bets anticipating further weakness.

ICICI Bank’s stock has underperformed its sector by 2.46% on the day, with a one-day return of -2.89% compared to the sector’s -0.87% and the Sensex’s -0.52%. The stock has also been on a three-day losing streak, falling 4.75% over this period. Intraday, it touched a low of ₹1364.3, down 3.3%, reinforcing the bearish momentum.

Technical Indicators Confirm Downtrend

From a technical standpoint, ICICI Bank is trading below all major moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a sustained downtrend. This technical weakness likely contributes to the increased demand for put options as investors seek to hedge against further declines or capitalise on bearish expectations.

Investor participation remains robust, with delivery volumes on 16 January reaching 89.12 lakh shares, marginally up by 0.01% against the five-day average delivery volume. The stock’s liquidity is sufficient to support sizeable trades, with a 2% threshold of the five-day average traded value allowing for trade sizes of up to ₹37.75 crore, facilitating active options market activity.

Fundamental and Market Positioning Analysis

ICICI Bank, with a market capitalisation of ₹10,09,638 crore, is classified as a large-cap stock within the private sector banking industry. Its current Mojo Score stands at 57.0, reflecting a Hold rating, an improvement from a previous Sell grade assigned on 5 January 2026. Despite this upgrade, the stock’s recent price action and option market behaviour suggest caution among investors.

The bank’s market cap grade is 1, indicating its significant size and influence in the sector. However, the recent underperformance relative to the sector and benchmark indices, combined with the heavy put option activity, points to a cautious outlook in the short term. Investors appear to be hedging their exposure or speculating on further downside, especially given the stock’s failure to sustain above key moving averages.

Put Option Strike Prices Reflect Key Support Levels

The concentration of put option activity around the ₹1350 to ₹1400 strike prices is particularly telling. The ₹1400 strike, slightly above the current market price, has the highest open interest, suggesting that investors are keen to protect against a drop below this level. Similarly, the ₹1380 and ₹1370 strikes have seen substantial trading volumes, indicating these are critical support zones being closely watched by market participants.

Such clustering of put options near the money often signals expectations of volatility or a potential price correction. It also reflects a strategic approach by traders to balance risk and reward, either by hedging existing long positions or positioning for a bearish move.

Implications for Investors and Traders

The pronounced put option activity in ICICI Bank ahead of the 27 January expiry suggests that investors are bracing for potential downside or increased volatility in the near term. For long-term investors, this may signal a period of consolidation or correction, warranting close monitoring of technical support levels and broader market conditions.

Traders, on the other hand, may view the heavy put volumes as an opportunity to capitalise on short-term bearish momentum or to implement hedging strategies to mitigate risk. The liquidity and active participation in both the stock and options markets provide ample scope for tactical positioning.

It is also important to consider the broader macroeconomic environment and sectoral trends impacting private sector banks, including interest rate movements, credit growth, and regulatory developments, which could influence ICICI Bank’s price trajectory in the coming weeks.

Conclusion

ICICI Bank’s recent surge in put option trading, particularly at strike prices close to the current market value, underscores a cautious or bearish sentiment among investors. The stock’s underperformance relative to its sector and benchmark indices, combined with technical weakness and elevated open interest in puts, suggests that market participants are preparing for potential downside risks ahead of the January expiry.

While the bank’s fundamental rating has improved to Hold from Sell, the options market activity highlights the need for investors to remain vigilant and consider protective strategies. Monitoring price action around key support levels and staying attuned to sectoral and macroeconomic developments will be crucial for navigating the near-term outlook.

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