Hindustan Zinc Sees Heavy Put Option Activity Amidst Bullish Price Momentum

Put Option Activity Highlights

On 17 December 2025, Hindustan Zinc Ltd witnessed substantial put option trading, particularly for contracts expiring on 30 December 2025. The strike prices attracting the highest volumes were ₹580 and ₹570, with 2,272 and 2,302 contracts traded respectively. The turnover for the ₹580 strike stood at ₹416.09 lakhs, while the ₹570 strike recorded ₹286.79 lakhs in turnover. Open interest figures further underline the prominence of these strikes, with 1,099 contracts open at ₹580 and 1,259 at ₹570.

The underlying stock price at the time was ₹582.05, placing the ₹580 strike almost at-the-money and the ₹570 strike slightly out-of-the-money. This concentration of put option activity near the current market price suggests a strategic positioning by market participants, potentially reflecting hedging against downside risk or speculative bearish bets ahead of the expiry.

Price Performance and Market Context

Contrary to the heavy put option interest, Hindustan Zinc’s price action on the day showed resilience. The stock opened with a gap up of 2.17% and touched an intraday high of ₹584.2, marking a new 52-week peak. This performance outpaced the Non-Ferrous Metals sector, which gained 2.06%, and the broader Sensex, which rose by 0.17% on the same day. The stock’s 1-day return was 2.45%, compared to the sector’s 1.91%.

Technical indicators reinforce the bullish undertone, with Hindustan Zinc trading above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. Such positioning often signals sustained upward momentum and investor confidence in the stock’s medium to long-term prospects.

Sector and Liquidity Considerations

Hindustan Zinc operates within the Non-Ferrous Metals industry, a sector that has shown positive momentum recently. The stock’s market capitalisation stands at ₹2,45,744.55 crores, categorising it as a large-cap entity with significant institutional interest. Liquidity metrics indicate that the stock is sufficiently liquid to support sizeable trades, with a 5-day average traded value allowing for trade sizes up to ₹26.1 crores based on 2% of average volume.

However, investor participation measured by delivery volume showed a decline, with 26.69 lakh shares delivered on 16 December representing a 57.56% drop against the 5-day average delivery volume. This reduction in delivery volume may reflect a shift in trading behaviour, possibly linked to the increased use of derivatives for hedging or speculative purposes.

Interpreting the Put Option Interest

The concentration of put option contracts at strike prices close to the current market value often indicates a hedging strategy by investors seeking protection against potential price declines. Given Hindustan Zinc’s recent price strength, some market participants may be using these puts as insurance against a correction or volatility in the near term.

Alternatively, the elevated put volumes could signal speculative bearish positioning, with traders anticipating a pullback after the recent rally. The expiry date of 30 December 2025 is approaching, which may be prompting increased activity as traders adjust their positions ahead of the year-end.

Open interest data supports this interpretation, as the sizeable number of outstanding contracts at these strikes suggests that these positions are not merely transient but part of a broader market strategy. The interplay between bullish price action and heavy put option interest highlights the nuanced market sentiment surrounding Hindustan Zinc.

Broader Market and Sector Dynamics

The Non-Ferrous Metals sector, to which Hindustan Zinc belongs, has been exhibiting positive trends, with the sector index gaining 2.06% on the day. This sectoral strength is often influenced by global commodity prices, industrial demand, and macroeconomic factors such as infrastructure spending and export dynamics.

Hindustan Zinc’s performance relative to its sector and the broader market suggests that it remains a key player within its industry. The stock’s ability to maintain levels above multiple moving averages indicates underlying strength, which may be attracting both long-term investors and short-term traders.

Investor Implications and Outlook

For investors and traders, the current scenario presents a mixed picture. The strong price momentum and new highs suggest confidence in Hindustan Zinc’s fundamentals and sectoral prospects. However, the heavy put option activity near current price levels signals caution among some market participants, who may be seeking downside protection or anticipating volatility.

Market participants should consider the implications of these derivative market signals alongside the stock’s technical and fundamental indicators. The approaching expiry date for the active put contracts may lead to increased volatility as positions are squared off or rolled forward.

Given the stock’s liquidity and large market capitalisation, Hindustan Zinc remains a significant focus for institutional and retail investors alike. Monitoring option market activity alongside price trends can provide valuable insights into evolving market sentiment and potential price movements.

Summary

Hindustan Zinc Ltd’s put option market activity ahead of the 30 December 2025 expiry reveals a notable concentration of contracts at ₹580 and ₹570 strike prices, reflecting a blend of hedging and speculative strategies. Despite this, the stock’s price performance remains robust, achieving a new 52-week high and trading above all major moving averages. The divergence between option market positioning and price action underscores the complexity of investor sentiment in the Non-Ferrous Metals sector as the year draws to a close.

Investors should weigh these factors carefully, considering both the protective measures evident in the options market and the underlying strength demonstrated by the stock’s price and sectoral trends.

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