Multi Commodity Exchange Sees Surge in Put Option Activity Amid Sharp Price Decline

MCX’s Recent Price Performance and Market Context

MCX has underperformed its sector markedly, falling 12.75% on 1 February 2026, compared to a modest 0.56% decline in the capital markets sector and a 0.19% gain in the Sensex. The stock has been on a downward trajectory for two consecutive sessions, losing 18.11% over this period. It opened sharply lower by 9.02% on the day and touched an intraday low of ₹2,148.8, representing a 15% drop from previous levels. The weighted average traded price skewed towards the day’s low, reflecting strong selling pressure.

Despite trading above its 50-day, 100-day, and 200-day moving averages, MCX currently trades below its 5-day and 20-day averages, indicating short-term weakness amid a longer-term uptrend. Intraday volatility has surged to 6.75%, underscoring heightened uncertainty. Investor participation has also risen, with delivery volumes on 30 January reaching 40.51 lakh shares, an 82.93% increase over the five-day average, signalling active repositioning by market participants.

Heavy Put Option Activity Highlights Bearish Sentiment

Put options on MCX have emerged as the most actively traded contracts in the stock’s options chain, particularly for the 24 February 2026 expiry. The strike prices attracting the highest put volumes are ₹2,200, ₹2,300, ₹2,100, and ₹2,000, all below or near the current underlying value of ₹2,201.0. This concentration suggests investors are seeking downside protection or speculating on further declines.

The ₹2,200 strike put saw the highest number of contracts traded at 5,415, generating a turnover of ₹44.72 crore and an open interest of 1,039 contracts. The ₹2,300 strike, slightly out-of-the-money, recorded 3,619 contracts traded with a turnover of ₹39.52 crore and open interest of 1,003. The ₹2,100 and ₹2,000 strikes also witnessed robust activity, with 4,508 and 4,588 contracts traded respectively, and turnovers of ₹26.42 crore and ₹17.93 crore.

This pattern of heavy put buying at multiple strikes below the current price indicates a hedging strategy by long holders or outright bearish bets by traders anticipating further downside. The open interest figures confirm that these positions are not merely intraday trades but represent sustained interest in downside protection.

Implications of Put Option Trends for Investors

The surge in put option volumes and open interest at strikes clustered around and below the current market price suggests a cautious or bearish outlook among traders and institutional investors. This activity often precedes or accompanies periods of heightened market uncertainty or correction, as participants seek to hedge existing long positions or speculate on further declines.

Given MCX’s recent underperformance relative to its sector and the broader market, the elevated put buying may reflect concerns over near-term headwinds such as regulatory developments, commodity market volatility, or broader macroeconomic factors impacting capital markets. The stock’s mid-cap status and a market capitalisation of ₹54,728 crore also make it a focal point for active trading and hedging strategies.

Investors should note that the put option expiry on 24 February 2026 is less than a month away, which could lead to increased volatility as positions are squared off or rolled forward. The concentration of open interest near the ₹2,200 strike, close to the current price, may act as a psychological support or resistance level depending on price action in the coming weeks.

Mojo Score Upgrade Reflects Underlying Strength Despite Near-Term Weakness

Despite the recent price weakness and bearish option positioning, MCX’s fundamental outlook remains robust. The company holds a strong Mojo Score of 82.0, upgraded from a previous Buy to a Strong Buy rating on 18 November 2025. This upgrade reflects improved financial metrics, quality grades, and trend assessments that favour long-term investors.

However, the market cap grade of 2 indicates a mid-cap classification, which can be prone to sharper price swings and volatility compared to large caps. This dynamic is evident in the stock’s current trading patterns and option market activity, underscoring the importance of risk management for investors.

Strategic Considerations for Traders and Investors

For traders, the current option market activity offers opportunities to capitalise on volatility through put option strategies or protective hedges. The high turnover and open interest at strikes between ₹2,000 and ₹2,300 provide a range of strike prices to tailor risk-reward profiles according to individual outlooks.

Long-term investors should weigh the recent price correction against MCX’s strong fundamental backdrop and upgraded Mojo Grade. While the short-term technicals and option market sentiment suggest caution, the company’s leadership in the capital markets sector and solid financial health support a constructive medium to long-term view.

Monitoring open interest changes and price action around the February expiry will be critical to gauge whether bearish sentiment persists or dissipates. Investors may also consider layering positions or employing stop-loss mechanisms to manage downside risk amid ongoing volatility.

Conclusion

The Multi Commodity Exchange of India Ltd is currently experiencing pronounced bearish positioning as evidenced by heavy put option trading ahead of the 24 February 2026 expiry. This activity aligns with the stock’s recent sharp decline and elevated volatility, reflecting investor caution and hedging demand. While the near-term outlook appears challenging, the company’s upgraded fundamental rating and strong Mojo Score provide a counterbalance for longer-term investors. Careful monitoring of option market dynamics and price levels will be essential for navigating this evolving landscape.

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