Mahindra & Mahindra Sees Heavy Put Option Activity Ahead of February Expiry

Put Option Activity Highlights

Data from the options market reveals that M&M’s put options have been the most actively traded among stocks, with three strike prices drawing significant volumes. The 3700 strike price leads with 18,604 contracts traded, generating a turnover of ₹2661.49 lakhs and an open interest of 2,222 contracts. Close behind is the 3600 strike, with 14,011 contracts traded and a turnover exceeding ₹1013.27 lakhs, alongside an open interest of 2,916. The 3500 strike also saw substantial activity, with 10,935 contracts traded and a turnover of ₹396.50 lakhs, supported by an open interest of 3,108 contracts.

These strike prices are positioned below the current underlying value of ₹3,726.60, indicating that traders are either hedging against potential downside risks or speculating on a price correction in the near term. The clustering of open interest around these strikes suggests that market participants are preparing for volatility as the expiry date nears.

Stock Performance and Technical Context

Despite the heavy put option activity, M&M’s stock price remains resilient, trading just 3.14% below its 52-week high of ₹3,839.90. The stock closed with a modest gain of 1.00% on 11 February 2026, in line with the broader automobile sector’s 1.42% advance, while the Sensex declined marginally by 0.12%. This relative strength is underpinned by the stock trading above all major moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling a sustained uptrend.

However, the recent price action shows a slight reversal after three consecutive days of gains, which may be prompting investors to seek downside protection through put options. Additionally, delivery volumes have dropped by 22.64% compared to the five-day average, indicating a possible reduction in investor participation or profit-booking at current levels.

Market Capitalisation and Quality Metrics

Mahindra & Mahindra Ltd is a large-cap company with a market capitalisation of ₹4,61,647.64 crores, classified within the automobile industry. The company’s Mojo Score stands at 71.0, reflecting a positive outlook, and it was recently upgraded from a Hold to a Buy rating on 6 February 2026. This upgrade underscores improved fundamentals and investor confidence, despite the cautious positioning seen in the options market.

Expiry Patterns and Investor Sentiment

The 24 February 2026 expiry is attracting significant attention in M&M’s options segment, with put contracts dominating the volume and turnover charts. The concentration of open interest at the 3500 to 3700 strike range suggests that investors are bracing for a potential pullback of approximately 5-7% from current levels. This could be a reflection of profit-taking or hedging against broader market uncertainties.

Put options are often used as insurance against downside risk, and the elevated activity here may indicate that institutional investors and traders are positioning defensively. The fact that the stock remains above key moving averages and near its yearly highs adds complexity to the outlook, as the technical strength contrasts with the cautious sentiment implied by options data.

Liquidity and Trading Dynamics

M&M’s stock liquidity remains robust, with an average traded value sufficient to support trade sizes of up to ₹12.54 crores based on 2% of the five-day average traded value. This liquidity ensures that both spot and derivatives market participants can execute sizeable trades without significant price impact, facilitating the active options market seen currently.

Investors should note that while the put option volumes are high, the open interest figures suggest that many positions are still being established or rolled over, rather than closed out. This ongoing activity could lead to increased volatility as expiry approaches, especially if the stock price moves closer to these strike prices.

Implications for Investors

For investors, the current options market activity in Mahindra & Mahindra Ltd offers valuable insights. The heavy put option volumes at strikes below the current market price suggest a degree of caution, possibly signalling expectations of short-term volatility or a corrective phase. However, the stock’s strong technical positioning and recent upgrade to a Buy rating by MarketsMOJO indicate underlying strength and positive medium-term prospects.

Investors looking to enter or add to positions in M&M should weigh these factors carefully. Hedging strategies using put options could be prudent to mitigate downside risk, especially given the proximity to the 52-week high and the potential for profit-booking. Conversely, those with a bullish outlook may view the current option premiums as an opportunity to sell puts or engage in spread strategies to capitalise on expected stability or upside.

Conclusion

Mahindra & Mahindra Ltd’s options market activity ahead of the 24 February expiry highlights a nuanced market sentiment. While the stock remains technically strong and near record highs, the surge in put option trading reflects a cautious stance among investors, likely driven by hedging needs and anticipation of short-term volatility. Monitoring open interest trends and price movements in the coming weeks will be crucial for investors aiming to navigate this large-cap automobile stock effectively.

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