Eternal Ltd Sees Heavy Put Option Activity Amid Bearish Market Signals

Put Option Activity Highlights

Data from the derivatives market reveals that Eternal Ltd’s put options with strike prices of ₹280, ₹285, and ₹290 have attracted substantial trading volumes. The highest number of contracts traded was at the ₹290 strike, with 4,401 contracts exchanged, generating a turnover of approximately ₹646.75 lakhs. This was followed by the ₹285 strike with 3,354 contracts and a turnover of ₹326.15 lakhs, and the ₹280 strike with 3,320 contracts and a turnover of ₹201.28 lakhs. Open interest figures also indicate a strong presence of outstanding positions, with 2,331 contracts at ₹290, 1,535 at ₹285, and 1,853 at ₹280.

The underlying stock price at the time of this activity was ₹288.40, placing the ₹285 and ₹290 strike puts close to the money, which often attracts hedging and speculative trades. The concentration of activity near these strike prices suggests that market participants are positioning for potential declines or protecting existing long positions against downside moves.

Price and Market Performance Context

On the trading day preceding the expiry, Eternal Ltd’s stock price showed signs of weakness, touching an intraday low of ₹288.05, a decline of 3.48%. The stock underperformed its sector by 2.63% and the broader Sensex by 3.05% (Sensex down 0.37%, sector down 0.73%). This price behaviour followed three consecutive days of gains, indicating a possible trend reversal or profit-taking phase.

Volume analysis reveals that the weighted average price of trades was closer to the day’s low, suggesting selling pressure. Additionally, delivery volumes on 15 December stood at 95.22 lakh shares, representing a 58.42% reduction compared to the five-day average, signalling falling investor participation. Despite this, liquidity remains adequate, with the stock able to support trade sizes up to ₹13.51 crore based on 2% of the five-day average traded value.

Technically, Eternal Ltd’s price is positioned above its 200-day moving average but below its 5-day, 20-day, 50-day, and 100-day moving averages. This mixed moving average alignment points to a stock that has seen recent short-term weakness but retains some longer-term support.

Investor Sentiment and Hedging Implications

The surge in put option volumes at strike prices near the current market price of Eternal Ltd indicates a heightened level of bearish sentiment or risk aversion. Put options serve as a tool for investors to hedge against potential declines in the underlying stock or to speculate on downward price movements. The concentration of open interest at these strikes suggests that many market participants are either protecting their holdings or positioning for a possible correction.

Given the stock’s recent underperformance relative to its sector and the broader market, alongside the observed decline in delivery volumes, the option market activity aligns with a cautious outlook. The expiry date of 30 December 2025 is approaching, which often leads to increased option trading as investors adjust their positions ahead of contract settlement.

Sector and Market Capitalisation Context

Eternal Ltd operates within the E-Retail and E-Commerce sector, a space characterised by rapid growth but also significant volatility due to changing consumer behaviour and competitive pressures. The company’s market capitalisation stands at ₹2,87,822 crore, categorising it as a large-cap stock. Large-cap stocks typically attract institutional interest, which can influence option market dynamics as these investors employ derivatives for portfolio risk management.

In comparison to its sector peers, Eternal Ltd’s recent price trend and option market activity may reflect sector-wide concerns or company-specific factors influencing investor positioning. The stock’s underperformance relative to the sector’s 1-day return of -0.73% and the Sensex’s -0.37% suggests that investors are factoring in additional risks or uncertainties.

Expiry Patterns and Market Outlook

The approaching expiry of options on 30 December 2025 has intensified trading activity in Eternal Ltd’s put options. Expiry dates often bring heightened volatility as traders close or roll over positions. The elevated open interest and turnover at strike prices just below and above the current market price indicate that investors are actively managing their exposure.

While the put option volumes suggest a defensive stance, it is important to consider that such activity can also be part of complex strategies, including spreads or hedges against other positions. The mixed signals from moving averages and the recent price dip after a short rally add to the nuanced market assessment.

Investors and market watchers should monitor subsequent price action and option market developments to gauge whether the bearish positioning will translate into sustained downward pressure or if the stock will stabilise and resume its longer-term trend.

Conclusion

Eternal Ltd’s recent surge in put option trading, particularly at strike prices near the current market level, reflects a market environment where investors are adopting cautious or bearish postures. The stock’s price behaviour, combined with reduced delivery volumes and underperformance relative to its sector and the Sensex, supports this interpretation.

As the 30 December 2025 expiry approaches, the option market activity will remain a key indicator of investor sentiment and risk management strategies. Market participants should consider these factors alongside broader sector trends and company fundamentals when analysing Eternal Ltd’s near-term prospects.

Overall, the data points to a period of heightened vigilance among investors in Eternal Ltd, with put options serving as a critical tool for hedging and expressing market views in a volatile environment.

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