Mahindra & Mahindra Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

On 12 February 2026, Mahindra & Mahindra Ltd emerged as the most active stock in put options trading, with the 3600 strike price put contracts dominating volumes. A total of 3,859 contracts were traded, generating a turnover of approximately ₹465.24 lakhs. Open interest at this strike stands at 2,765 contracts, reflecting sustained interest in downside protection or speculative bearish bets.

The underlying stock price at the time was ₹3,642.60, placing the 3600 strike slightly out-of-the-money, which is a common level for hedging against moderate declines. The expiry date of 24 February 2026 is just under two weeks away, indicating that traders are positioning for potential volatility or a correction in the near term.

Stock Performance and Technical Context

Mahindra & Mahindra Ltd has underperformed its sector by 0.36% on the day, with a 1-day return of -0.88% compared to the sector’s -0.48% and the Sensex’s -0.45%. The stock has been on a consecutive two-day decline, losing 0.9% over this period. Notably, the weighted average price of traded volumes has gravitated closer to the day’s low, signalling selling pressure.

Despite this short-term weakness, M&M continues to trade above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, underscoring a resilient medium to long-term technical trend. Rising investor participation is evident from the delivery volume of 16.23 lakh shares on 11 February, which surged 63.58% above the five-day average delivery volume, suggesting increased interest from long-term holders or institutional players.

Liquidity remains robust, with the stock capable of handling trade sizes up to ₹16.25 crore based on 2% of the five-day average traded value, making it an attractive option for both retail and institutional traders.

Bearish Positioning and Hedging Implications

The heavy put option activity at the 3600 strike price suggests that market participants are either hedging existing long positions or speculating on a potential downside move. Given the stock’s current price near ₹3,642, the 3600 strike is a logical level for protection against a moderate decline of around 1.2%. The open interest of 2,765 contracts further confirms that this strike is a focal point for traders.

Put options serve as insurance for holders against adverse price movements, and the elevated turnover of ₹465.24 lakhs indicates significant capital allocation towards downside risk mitigation. This is particularly relevant in the context of recent sectoral headwinds affecting the automobile industry, including raw material cost pressures and regulatory uncertainties.

Moreover, the expiry date of 24 February 2026 is critical as it coincides with the end of the current monthly options cycle, often a period of heightened volatility and position adjustments. Traders may be recalibrating their portfolios in anticipation of quarterly earnings or macroeconomic data releases that could impact the stock’s trajectory.

Fundamental and Market Context

Mahindra & Mahindra Ltd, with a market capitalisation of ₹4,56,953 crore, remains a large-cap heavyweight in the Indian automobile sector. The company’s Mojo Score stands at 77.0, reflecting a strong Buy rating, upgraded from Hold on 6 February 2026. This upgrade was driven by improved fundamentals and positive outlook on product launches and rural demand recovery.

Despite the recent dip in share price and increased put option activity, the underlying fundamentals remain robust. The company’s diversified portfolio across passenger vehicles, tractors, and commercial vehicles provides a cushion against sector-specific shocks. However, investors appear cautious, as reflected in the put option volumes, possibly awaiting clearer signals from upcoming quarterly results and macroeconomic developments.

Comparative Sector and Market Analysis

Within the automobile sector, Mahindra & Mahindra’s recent underperformance contrasts with some peers who have maintained steadier gains. The sector’s 1-day return of -0.48% and Sensex’s -0.45% indicate a broadly cautious market environment. The put option interest in M&M is notably higher than typical levels, signalling that investors are more concerned about downside risk in this stock relative to its peers.

Such heightened put activity often precedes periods of increased volatility or market corrections. Traders and portfolio managers may be using these options to hedge exposure or to speculate on a potential pullback, especially given the stock’s recent two-day decline and the proximity of the 3600 strike price to the current market price.

Outlook and Investor Considerations

Investors should weigh the technical resilience of Mahindra & Mahindra Ltd against the evident caution expressed through options market activity. The stock’s position above all major moving averages suggests underlying strength, but the surge in put option volumes and open interest at a key strike price highlights the market’s hedging behaviour and potential for near-term volatility.

Given the company’s recent upgrade to a Buy rating and strong Mojo Score, long-term investors may view current weakness as a buying opportunity, while short-term traders should remain vigilant for price swings around the 3600 level and the upcoming expiry date.

Overall, the options market data provides valuable insight into investor sentiment, signalling a nuanced outlook where bullish fundamentals coexist with tactical bearish hedging.

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