Sun Pharmaceutical Sees Surge in Call Option Activity Amid Bullish Momentum

Robust Price Performance and Market Context

On 3 February 2026, Sun Pharma’s stock price demonstrated considerable strength, opening with a gap up of 5.04% and touching an intraday high of ₹1725, representing a 5.96% rise from the previous close. This performance outpaced the Pharmaceuticals & Biotechnology sector, which gained 2.81%, and the broader Sensex, which rose 2.57% on the same day. The stock has been on a consistent upward trajectory, recording gains for four consecutive sessions and delivering a cumulative return of 6.55% during this period.

Despite the recent rally, the stock’s weighted average traded volume has been concentrated closer to the lower end of the day’s price range, suggesting some profit-taking or cautious positioning among traders. The moving averages present a mixed technical picture: the stock is trading above its 5-day, 20-day, and 200-day moving averages but remains below the 50-day and 100-day averages, indicating short-term strength amid medium-term consolidation.

Call Option Activity Highlights Bullish Positioning

The most active call options on Sun Pharma are concentrated at the ₹1700 strike price with an expiry date of 24 February 2026. On this date, a total of 8,200 contracts were traded, generating a turnover of ₹483.595 lakhs. The open interest at this strike stands at 3,594 contracts, reflecting substantial investor interest and positioning ahead of the expiry.

Given the underlying stock price of ₹1689.7, the ₹1700 strike calls are positioned near-the-money, which typically attracts speculative and hedging activity. The high volume and open interest suggest that market participants are anticipating further upside in the stock price over the coming weeks. This bullish sentiment is reinforced by the stock’s recent outperformance relative to its sector and the broader market.

Market Capitalisation and Quality Assessment

Sun Pharmaceutical Industries Ltd is a large-cap company with a market capitalisation of approximately ₹4,05,415.63 crores. The company operates within the Pharmaceuticals & Biotechnology industry, a sector that has shown resilience and steady growth amid evolving healthcare demands. The stock currently holds a Mojo Score of 62.0, categorised as a Hold, following a downgrade from a Buy rating on 19 January 2026. This adjustment reflects a more cautious stance by analysts, possibly due to valuation concerns or sector headwinds, despite the recent bullish price action.

The Market Cap Grade is rated at 1, indicating the company’s significant size and liquidity, which supports active trading and investor participation. However, delivery volumes have declined by 33.35% compared to the five-day average, signalling a temporary dip in investor commitment to holding the stock long-term amid the recent rally.

Implications of Option Expiry and Strike Price Concentration

The concentration of call option activity at the ₹1700 strike price with expiry less than a month away suggests that traders are positioning for a potential breakout above this level. If the stock sustains above ₹1700, these call options could become increasingly valuable, potentially driving further speculative buying in the underlying shares.

Open interest of 3,594 contracts at this strike is significant, indicating that a sizeable number of investors have either bought or written these options. This level of open interest can also lead to increased volatility as expiry approaches, with market makers and traders adjusting their hedges accordingly.

Given the stock’s recent four-day gain streak and outperformance relative to the sector, the bullish positioning in options aligns with technical momentum. However, the mixed signals from moving averages and reduced delivery volumes caution investors to monitor for potential profit-taking or consolidation.

Sectoral and Broader Market Context

The Pharmaceuticals & Biotechnology sector has gained 2.81% on the day, supported by positive sentiment around healthcare innovation and steady demand for pharmaceutical products. Sun Pharma’s outperformance by 1.2% relative to the sector underscores its leadership position and investor preference within the space.

Liquidity remains robust, with the stock’s average traded value supporting trade sizes of up to ₹12.54 crores, ensuring that institutional investors can enter or exit positions without significant market impact. This liquidity is a key factor underpinning the active options market and the stock’s attractiveness for derivatives trading.

Outlook and Investor Considerations

Investors should weigh the recent bullish momentum and active call option positioning against the broader technical and fundamental backdrop. While the stock’s short-term trend is positive, the Hold rating and Mojo Score of 62.0 suggest that upside may be tempered by valuation concerns or sector-specific risks.

Those considering exposure via options should be mindful of the approaching expiry on 24 February 2026 and the potential for increased volatility. The ₹1700 strike price represents a critical level to watch, as a sustained move above this threshold could trigger further gains and option premium appreciation.

Conversely, a failure to maintain momentum could lead to a pullback, especially given the stock’s position below its 50-day and 100-day moving averages. Investors may also want to monitor delivery volumes and sector performance for additional clues on underlying demand and market sentiment.

Overall, Sun Pharmaceutical Industries Ltd remains a key stock within the Pharmaceuticals & Biotechnology sector, with active derivatives interest reflecting its importance to traders and investors alike.

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