Asian Paints Sees Heavy Put Option Activity Ahead of December Expiry

Put Option Activity Highlights

Data from the derivatives market reveals that Asian Paints Ltd. recorded the most active put option contracts with the 30 December 2025 expiry date. The strike price attracting the highest volume is ₹2,900, closely aligned with the current underlying value of ₹2,899.8. A total of 2,266 contracts were traded, generating a turnover of approximately ₹2.87 crores (286.93 lakhs). Open interest at this strike stands at 1,549 contracts, indicating sustained investor interest in downside protection or speculative bearish bets.

The concentration of put options at the ₹2,900 strike price, just marginally below the stock’s recent closing levels, suggests that market participants are positioning for a possible price correction or are seeking to hedge existing long exposures. This activity is particularly noteworthy given the proximity to the expiry date, which often sees heightened option trading as investors adjust their portfolios ahead of contract settlements.

Price and Trend Context

Asian Paints closed the day approximately 0.59% shy of its 52-week high of ₹2,926.9, signalling a strong price level near its peak range. The stock outperformed its sector by 0.56% on the day, while the broader Sensex index declined by 0.31%, highlighting relative strength in the paint industry amid mixed market conditions.

After two consecutive days of price declines, Asian Paints recorded gains, indicating a potential short-term trend reversal. The stock is trading above all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — which typically reflects a bullish technical setup. However, the surge in put option activity may imply that some investors are cautious about sustaining these gains or are preparing for volatility.

Investor Participation and Liquidity

Delivery volume on 1 December was reported at 3.24 lakh shares, representing a sharp decline of 71.09% compared to the five-day average delivery volume. This drop in investor participation could indicate reduced conviction among buyers at current price levels or a wait-and-watch approach ahead of key market events.

Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting transactions up to ₹4.71 crores based on 2% of the five-day average traded value. This level of liquidity ensures that option and equity market participants can execute sizeable orders without significant price impact.

Market Capitalisation and Sector Positioning

Asian Paints is classified as a large-cap stock with a market capitalisation of approximately ₹2,74,839 crores. It operates within the paints industry, a sector that has shown resilience amid varying economic cycles due to steady demand from both industrial and consumer segments.

The stock’s one-day return of 1.16% outpaces the sector’s 0.64% gain and contrasts with the Sensex’s decline of 0.31%, underscoring its relative strength. This performance, combined with the option market activity, suggests that while the stock remains in a favourable position, investors are mindful of potential near-term risks.

Expiry Patterns and Investor Sentiment

The December 2025 expiry is a critical juncture for Asian Paints, with the bulk of put option contracts clustered at the ₹2,900 strike. This pattern often reflects a hedging strategy by institutional investors or traders anticipating a possible pullback from current levels. The open interest data supports the view that these positions are not merely speculative but may be part of broader risk management frameworks.

Put options serve as a form of insurance against price declines, and their heightened activity can signal increased caution. However, it is important to note that such positioning does not necessarily predict a sharp downturn but rather a preparedness for volatility or sideways price action.

Technical Indicators and Moving Averages

Asian Paints’ trading above all major moving averages indicates a sustained upward momentum over multiple time frames. The 5-day and 20-day averages capture short-term trends, while the 50-day, 100-day, and 200-day averages provide insight into medium and long-term price direction. This alignment typically suggests a bullish bias, yet the put option interest points to a nuanced market view where investors balance optimism with prudence.

Implications for Investors

The current option market dynamics for Asian Paints suggest that investors are adopting a cautious stance despite the stock’s strong technical positioning and sector outperformance. The concentration of put options near the current price level indicates a hedging approach or anticipation of a potential price correction as the December expiry nears.

For market participants, this environment calls for close monitoring of price action and volatility indicators. The interplay between strong moving averages and elevated put option interest may result in a period of consolidation or increased price swings. Investors with exposure to Asian Paints might consider reviewing their risk management strategies in light of these developments.

Conclusion

Asian Paints Ltd. remains a prominent large-cap stock within the paints sector, demonstrating resilience and relative strength in recent trading sessions. The surge in put option activity at the ₹2,900 strike price for the December 2025 expiry highlights a nuanced market sentiment, blending optimism with caution. As expiry approaches, the stock’s price trajectory and option market behaviour will be closely watched by investors seeking to navigate potential volatility and capitalise on emerging opportunities.

Get 1 year of Weekly Picks FREE when you subscribe to MojoOne. Offer ends soon. Start Saving Now →