Coal India Sees Heavy Put Option Activity Amid Bullish Price Momentum

Put Option Activity Highlights

On the derivatives front, Coal India Ltd. recorded a substantial put option turnover of approximately ₹90.47 lakhs, with 4,296 contracts traded at the ₹400 strike price expiring on 30 December 2025. The open interest for these puts stands at 2,018 contracts, indicating a notable level of bearish positioning or hedging interest among market participants. The underlying stock price at the time of this activity was ₹408.85, placing the ₹400 strike slightly out-of-the-money.

This concentration of put option activity near the ₹400 strike suggests that investors are either seeking protection against a potential downside or speculating on a price correction in the near term. The expiry date being just days away adds to the immediacy of these positions, reflecting active risk management or speculative strategies ahead of the year-end.

Price Performance and Market Context

Contrary to the bearish undertones implied by heavy put option volumes, Coal India’s stock price has exhibited resilience. The share price is currently trading just 2.04% below its 52-week high of ₹417.25, having touched an intraday peak of ₹412.40 during the latest session. The stock has recorded gains for six consecutive trading days, accumulating a return of 7.15% over this period.

On the day of the latest data, Coal India outperformed its sector by 0.37%, with a day-on-day price change of 1.86%. This performance also surpasses the broader Sensex index, which registered a modest 0.12% gain. The stock’s upward trajectory is further supported by its position above key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling sustained buying interest and technical strength.

Investor Participation and Liquidity

Investor engagement in Coal India shares has intensified, as reflected by a delivery volume of 99.51 lakh shares on 23 December 2025. This figure represents a 311.41% increase compared to the five-day average delivery volume, indicating heightened investor conviction or repositioning ahead of the expiry. The stock’s liquidity profile remains robust, with the capacity to handle trade sizes of approximately ₹5.43 crore based on 2% of the five-day average traded value.

Dividend Yield and Market Capitalisation

Coal India offers a dividend yield of 6.64% at the current price level, which may appeal to income-focused investors amid the prevailing market conditions. The company is classified as a large-cap entity with a market capitalisation of ₹2,46,725 crore, underscoring its significant presence in the miscellaneous sector.

Interpreting the Put Option Interest

The substantial put option activity at the ₹400 strike price, slightly below the current market price, may be indicative of hedging strategies by institutional investors or traders seeking to mitigate risk in case of a short-term price pullback. Alternatively, it could reflect speculative bets anticipating a correction before the expiry date.

Given the stock’s recent six-day gain streak and proximity to its yearly high, the put options might serve as a protective measure against profit-taking or market volatility during the year-end period. The open interest level of 2,018 contracts suggests that these positions are not merely transient but have some degree of commitment from market participants.

Expiry Patterns and Market Sentiment

With the expiry date on 30 December 2025 approaching, the concentration of put options at a strike price close to the current market value highlights a critical price level for traders. The expiry week often sees increased volatility as traders adjust or close positions, and the activity in Coal India’s options market is consistent with this pattern.

Market participants will be closely monitoring price movements around the ₹400 mark, as a breach below this level could trigger further downside pressure or activate these put options. Conversely, sustained trading above this strike price may lead to these puts expiring worthless, benefiting option sellers.

Sector and Broader Market Comparison

Coal India’s performance on the day outpaced the miscellaneous sector’s return of 1.98%, albeit marginally, and significantly exceeded the Sensex’s 0.12% gain. This relative strength may reflect company-specific factors such as operational updates, dividend attractiveness, or investor sentiment towards the coal and energy space.

Despite the put option interest signalling caution, the stock’s technical indicators and volume trends suggest a prevailing bullish bias among investors. This dichotomy between derivatives positioning and spot price action is not uncommon and often reflects differing time horizons or risk appetites among market participants.

Outlook and Investor Considerations

Investors analysing Coal India should weigh the implications of the heavy put option activity against the stock’s recent price strength and fundamental attributes. The dividend yield of 6.64% remains an attractive feature for income-oriented portfolios, while the stock’s large-cap status and liquidity support ease of trading.

Given the mixed signals from derivatives and spot markets, a cautious approach may be warranted in the short term, especially as the expiry date nears. Monitoring price action around the ₹400 strike and observing changes in open interest post-expiry will provide further clarity on market sentiment and potential directional moves.

Summary

Coal India Ltd. stands out as the most active stock in put options trading with a significant concentration at the ₹400 strike price expiring on 30 December 2025. While this suggests some degree of bearish hedging or speculation, the underlying stock continues to trade near its 52-week high, supported by strong technical indicators and rising investor participation. The stock’s dividend yield and large-cap stature add to its appeal, though investors should remain attentive to expiry dynamics and price levels in the coming days.

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