Hindustan Zinc Sees Surge in Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

Data from the derivatives market reveals that Hindustan Zinc Ltd witnessed substantial put option volumes concentrated around strike prices ranging from ₹600 to ₹700, all expiring on 24 February 2026. The most actively traded put contracts include:

• Strike ₹700: 3,649 contracts traded, turnover of ₹2,337.82 lakhs, open interest at 2,300 contracts


• Strike ₹680: 2,131 contracts traded, turnover of ₹1,063.51 lakhs, open interest at 1,025 contracts


• Strike ₹670: 2,121 contracts traded, turnover of ₹928.09 lakhs, open interest at 658 contracts


• Strike ₹650: 4,484 contracts traded, turnover of ₹1,422.11 lakhs, open interest at 2,618 contracts


• Strike ₹600: 3,062 contracts traded, turnover of ₹403.60 lakhs, open interest at 2,116 contracts

The concentration of open interest and turnover at strikes ₹650 and ₹700, both above and slightly below the current underlying price, suggests investors are positioning for potential downside risk or hedging existing long exposures. The high volume at the ₹700 strike, which is above the current market price, indicates a protective stance against further declines.

Stock Performance and Market Context

On 30 January 2026, Hindustan Zinc Ltd underperformed its sector, the Non-Ferrous Metals segment, which itself declined by 4.5%. The stock fell 5.6% on the day, opening with a gap down of 3.52% and touching an intraday low of ₹663.25, a 7.26% drop from previous levels. Despite this, the stock remains above its 20-day, 50-day, 100-day, and 200-day moving averages, though it trades below its 5-day moving average, indicating short-term weakness amid longer-term support.

Investor participation has notably increased, with delivery volumes on 29 January rising by 102.77% compared to the five-day average, reaching 1.92 crore shares. Liquidity remains robust, supporting trade sizes up to ₹52.93 crore based on recent average traded values.

Mojo Score Upgrade and Analyst Sentiment

Hindustan Zinc Ltd was upgraded from a Hold to a Buy rating on 9 October 2025, reflecting improved fundamentals and positive outlook within the Non-Ferrous Metals sector. The company holds a strong Market Cap Grade of 1, with a market capitalisation of ₹3,02,364 crore, categorising it firmly as a large-cap stock. The Mojo Score of 71.0 indicates favourable financial health, earnings momentum, and valuation metrics relative to peers.

However, the recent surge in put option activity and the stock’s underperformance relative to the Sensex (-0.48% on the same day) and sector (-5.63%) suggest that market participants are cautious. The elevated open interest in puts at strikes close to the current price points to a hedging strategy or outright bearish bets, possibly anticipating volatility or a correction in the near term.

Expiry Patterns and Investor Positioning

The expiry date of 24 February 2026 is less than a month away, intensifying option market activity. The clustering of put contracts at multiple strikes indicates layered protection or speculative positioning. The ₹650 and ₹600 strikes, with open interest exceeding 2,000 contracts each, highlight significant investor interest in downside protection well below the current market price, signalling expectations of potential price weakness or a buffer against sharp declines.

Meanwhile, the ₹700 strike, with the highest turnover and substantial open interest, suggests that some investors are insuring against a drop from recent highs. This mixed strike price distribution reflects a nuanced market view, balancing between hedging existing long positions and speculating on further downside.

Implications for Investors

For investors, the heavy put option activity in Hindustan Zinc Ltd serves as a cautionary signal. While the company’s fundamentals remain strong and the recent upgrade supports a positive medium-term outlook, the market’s positioning suggests heightened uncertainty and potential near-term volatility. Traders and portfolio managers may consider this data when adjusting hedging strategies or evaluating entry points.

Given the stock’s liquidity and active options market, investors have ample opportunity to implement protective strategies such as buying puts or collars to mitigate downside risk. Conversely, contrarian investors might view the elevated put volumes as a potential indicator of oversold conditions, warranting closer technical analysis before committing fresh capital.

Sectoral and Broader Market Context

The Non-Ferrous Metals sector has experienced a notable decline of 4.5% recently, pressured by global commodity price fluctuations and demand concerns. Hindustan Zinc Ltd’s relative outperformance by 0.69% against its sector on the day of the sell-off indicates some resilience, yet the stock’s 5.21% one-day return still reflects significant selling pressure. This divergence underscores the complex interplay between sectoral headwinds and company-specific factors.

Investors should also monitor broader market trends, as the Sensex’s modest decline of 0.48% contrasts with the sharper sectoral and stock-level moves. This divergence may amplify volatility in stocks like Hindustan Zinc Ltd, where commodity price sensitivity and geopolitical factors play a critical role.

Conclusion

In summary, Hindustan Zinc Ltd’s options market activity reveals a pronounced bearish sentiment with substantial put option volumes and open interest concentrated near current trading levels. Despite a favourable Mojo Score upgrade and strong market capitalisation, the stock faces short-term headwinds reflected in price declines and increased hedging demand. Investors should weigh these signals carefully, balancing the company’s robust fundamentals against the market’s cautious positioning ahead of the February expiry.

Upgrade at special rates, valid only for the next few days. Claim Your Special Rate →