Hindustan Zinc Sees Surge in Put Option Activity Ahead of March Expiry

Put Option Activity Highlights

Data from the derivatives market reveals that Hindustan Zinc’s put options with strike prices of ₹540 and ₹530 have emerged as the most actively traded contracts. Specifically, the ₹540 strike put saw 2,121 contracts traded, generating a turnover of approximately ₹84.44 lakhs, while the ₹530 strike put recorded 2,165 contracts with a turnover of ₹67.63 lakhs. Open interest for these strikes stands at 660 and 596 contracts respectively, indicating sustained interest and potential hedging or speculative positioning.

The underlying stock price at the time of analysis was ₹616.15, comfortably above these strike prices, which suggests that traders are either positioning for a potential downside correction or seeking protection against volatility in the near term. The expiry date of 30 March 2026 is just over a month away, adding urgency to these option plays as market participants weigh upcoming catalysts and sector dynamics.

Stock Performance and Technical Context

Hindustan Zinc’s stock has shown mixed technical signals recently. It trades above its 5-day, 20-day, 100-day, and 200-day moving averages, reflecting underlying strength and a generally positive medium-to-long-term trend. However, it remains below the 50-day moving average, which may be interpreted as a short-term resistance level. This technical setup could be contributing to the increased put option interest as traders hedge against a possible pullback.

On 26 February 2026, the stock’s delivery volume was 20.89 lakh shares, marking a decline of 20.64% compared to the five-day average delivery volume. This falling investor participation might be a sign of cautious sentiment or profit-booking after recent gains. Despite this, the stock remains liquid enough to support sizeable trades, with a 2% threshold of the five-day average traded value equating to ₹8.41 crore, ensuring that institutional and retail investors can execute sizeable positions without undue market impact.

Sector and Market Comparison

In terms of daily returns, Hindustan Zinc outperformed both its sector and the broader Sensex index on the day under review. The stock posted a 1.10% gain, compared to a 0.58% rise in the non-ferrous metals sector and a 0.54% decline in the Sensex. This relative strength underscores the company’s robust fundamentals and market positioning despite the cautious derivatives activity.

Hindustan Zinc is classified as a large-cap stock with a market capitalisation of ₹2,57,575 crore, reinforcing its status as a heavyweight in the metals space. The company’s Mojo Score currently stands at 64.0, with a Mojo Grade of Hold, downgraded from Buy on 13 February 2026. This downgrade reflects a tempered outlook based on recent financial metrics and market conditions, signalling investors to adopt a more measured approach.

Investor Positioning and Market Sentiment

The surge in put option volumes at strike prices significantly below the current market price suggests that investors are either hedging existing long positions or speculating on a potential downside move. The open interest figures, while moderate, indicate that these positions are not fleeting but rather part of a broader strategy to manage risk or capitalise on volatility.

Given the stock’s recent outperformance relative to the sector and Sensex, the put buying could be interpreted as a prudent risk management tactic amid uncertain macroeconomic factors or commodity price fluctuations that typically influence non-ferrous metals companies.

Expiry Patterns and Strategic Implications

The 30 March 2026 expiry is a key date for options traders, as it marks the end of the current quarterly cycle. The concentration of put option activity around the ₹530-₹540 strikes indicates a zone of interest where traders expect the stock price might gravitate or face pressure. This range could act as a psychological support level, with traders potentially looking to close or roll over positions depending on price action in the coming weeks.

Market participants should monitor open interest changes and volume trends closely as expiry approaches to gauge shifts in sentiment and potential volatility spikes. Additionally, any corporate announcements, commodity price movements, or macroeconomic developments could influence the stock’s trajectory and option market dynamics.

Outlook and Investor Takeaways

While Hindustan Zinc’s fundamentals remain solid, the recent downgrade to a Hold rating and the spike in put option activity suggest that investors should exercise caution. The stock’s technical setup, combined with falling delivery volumes, points to a potential consolidation phase or mild correction in the near term.

Investors with existing exposure may consider protective strategies such as buying puts or employing collars to mitigate downside risk. Conversely, those looking to initiate positions might wait for clearer signs of support near the ₹530-₹540 range or confirmation of renewed buying interest above the 50-day moving average.

Given the company’s large-cap status and significant market presence, it remains a key stock to watch within the non-ferrous metals sector, especially as global commodity markets navigate ongoing volatility and geopolitical uncertainties.

Summary

In summary, Hindustan Zinc Ltd’s derivatives market activity reveals a cautious investor stance with heavy put option volumes at strikes well below the current market price. This positioning reflects a hedging mindset or bearish speculation ahead of the March expiry. Despite this, the stock’s relative strength versus sector and benchmark indices, along with its large-cap credentials, suggest it remains a core holding for many portfolios, albeit with a more guarded outlook.

Market participants should closely monitor option open interest, price action, and sector developments to navigate the evolving risk-reward landscape effectively.

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