Hindustan Zinc Sees Surge in Put Option Activity Amid Bearish Sentiment

Heavy Put Option Volumes Concentrated Around Key Strike Prices

Data from the latest derivatives market activity reveals that Hindustan Zinc’s put options have been the most actively traded among non-ferrous metal stocks, with five strike prices drawing substantial volumes. The strike prices of ₹500, ₹560, ₹570, ₹580, and ₹600 have collectively accounted for tens of thousands of contracts traded, reflecting a broad spectrum of bearish sentiment.

Specifically, the ₹500 strike saw the highest number of contracts traded at 9,386, generating a turnover of approximately ₹1,700.53 lakhs and an open interest of 2,049 contracts. Close behind, the ₹560 and ₹570 strikes recorded 5,957 and 5,601 contracts traded respectively, with turnovers exceeding ₹2,500 lakhs each. The ₹600 strike price also attracted significant attention, with 4,290 contracts traded and a turnover of ₹2,859.91 lakhs, accompanied by the highest open interest of 2,416 contracts among the put options.

This concentration of activity around strikes both below and slightly above the current underlying price suggests a hedging strategy by investors wary of further downside, as well as speculative bets on a decline in the stock’s value.

Expiry Patterns and Market Implications

All the put options in focus are set to expire on 24 February 2026, indicating that traders are positioning themselves for near-term volatility. The clustering of open interest and turnover near this expiry date often precedes significant price movements, as market participants adjust their portfolios in response to evolving fundamentals and technical signals.

Hindustan Zinc’s recent price action has been notably weak, with the stock falling by 9.93% on the day of data capture and registering a two-day consecutive decline totalling a 20.18% loss. The stock opened sharply lower by 8.51% and touched an intraday low of ₹543.55, down 13.52% from previous levels. This downward momentum has likely fuelled the surge in put buying as investors seek downside protection or speculate on further declines.

Technical and Sector Context

From a technical standpoint, Hindustan Zinc is trading below its short- and medium-term moving averages (5-day, 20-day, and 50-day), although it remains above its longer-term 100-day and 200-day averages. This mixed technical picture suggests that while the stock has experienced recent weakness, it may still hold some longer-term support levels.

The broader non-ferrous metals sector has also been under pressure, with the Metal - Non Ferrous index falling by 8.94% on the same day. Hindustan Zinc’s performance is broadly in line with sector trends, reflecting the impact of commodity price fluctuations and macroeconomic concerns on metal producers.

Investor Participation and Liquidity

Investor interest in Hindustan Zinc remains robust, as evidenced by a 40.64% increase in delivery volume on 30 January 2026 compared to the five-day average, reaching 1.61 crore shares. The stock’s liquidity is sufficient to support sizeable trades, with a daily traded value capacity of approximately ₹58.95 crore based on 2% of the five-day average traded value.

Mojo Score Upgrade Reflects Improving Fundamentals

Hindustan Zinc currently holds a Mojo Score of 71.0, categorised as a Buy rating, upgraded from a previous Hold on 9 October 2025. This upgrade reflects improved financial metrics and positive trend assessments, despite the recent price weakness. The company’s market capitalisation stands at a substantial ₹2,38,287 crore, placing it firmly in the large-cap segment within the non-ferrous metals industry.

The stock’s market cap grade is rated 1, indicating strong market capitalisation relative to peers. This fundamental strength may provide a cushion against short-term volatility, even as option market activity signals caution.

Bearish Positioning and Hedging Strategies

The pronounced put option volumes at strikes ranging from ₹500 to ₹600 suggest that investors are actively hedging against further downside or speculating on a correction. The highest open interest at the ₹600 strike, which is above the current underlying price, indicates that some market participants expect the stock to fall below this level by expiry.

Meanwhile, the substantial turnover at the ₹500 strike, well below the current price, points to more aggressive bearish bets or protective puts for deeper declines. The broad distribution of put activity across these strikes highlights a cautious market stance, with investors seeking to manage risk amid uncertain commodity cycles and macroeconomic headwinds.

Outlook and Investor Considerations

While Hindustan Zinc’s fundamentals remain solid, the recent price action and heavy put option activity underscore the need for investors to remain vigilant. The stock’s alignment with sector weakness and the sizeable open interest in puts suggest that downside risks are being actively priced in by the market.

Investors should monitor upcoming earnings, commodity price trends, and broader economic indicators that could influence the stock’s trajectory. The near-term expiry on 24 February 2026 will be a critical juncture, potentially triggering volatility as option positions are squared off or rolled forward.

Conclusion

Hindustan Zinc Ltd’s recent surge in put option trading highlights a market environment fraught with caution and hedging activity. Despite a favourable Mojo Score upgrade and strong market capitalisation, the stock’s near-term outlook is clouded by sector weakness and technical pressures. Investors should weigh these factors carefully, balancing the company’s long-term growth prospects against the evident short-term risks signalled by options market behaviour.

As expiry approaches, the evolving open interest and price action will provide further clues on market sentiment and potential directional moves for this key player in the non-ferrous metals sector.

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