Interglobe Aviation Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Surge Highlights Investor Caution

On 31 Dec 2025, Interglobe Aviation Ltd (stock code 455546) emerged as the most active stock in put options trading, particularly for the expiry dated 27 Jan 2026. The put options at the ₹5,000 strike price saw 1,045 contracts traded, generating a turnover of approximately ₹18.89 crores. Open interest in these puts stands at 4,919 contracts, reflecting a substantial build-up of bearish bets or hedging positions ahead of the January expiry.

The underlying stock price at the time was ₹4,988, just below the ₹5,000 strike, indicating that traders are positioning for potential downside or protection against further declines. This activity is notable given the stock's recent performance and technical indicators.

Technical Weakness and Price Action

Interglobe Aviation has been under pressure, losing 1.72% over the last two trading sessions. The stock has traded within a narrow range of ₹27.5, suggesting consolidation but with a bearish undertone. Importantly, the share price is currently below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling a sustained downtrend across multiple timeframes.

Investor participation has risen, with delivery volumes on 30 Dec reaching 9.09 lakh shares, a 77.71% increase compared to the five-day average. This heightened activity amid falling prices suggests that investors are either liquidating positions or hedging existing exposure.

Liquidity remains robust, with the stock capable of supporting trade sizes up to ₹9.25 crores based on 2% of the five-day average traded value, ensuring that option market movements are backed by sufficient underlying stock liquidity.

Mojo Grade Downgrade Reflects Deteriorating Fundamentals

MarketsMOJO recently downgraded Interglobe Aviation's mojo grade from Hold to Sell on 3 Dec 2025, reflecting concerns over the airline's operational and financial outlook. The company holds a low mojo score of 33.0, indicating weak fundamentals relative to its peers. Its market cap grade is 1, categorising it as a large-cap stock but with limited quality metrics supporting a bullish stance.

This downgrade aligns with the increased put option activity, as investors appear to be pricing in risks related to rising fuel costs, competitive pressures, or potential demand softness in the airline sector.

Sector and Market Context

Interglobe Aviation's performance today was broadly in line with the airline sector, which declined by 0.43%, while the Sensex gained 0.17%. The stock itself fell 0.49%, marginally underperforming the sector. This relative weakness, combined with technical and fundamental headwinds, supports the bearish sentiment reflected in options markets.

Given the airline sector's sensitivity to macroeconomic factors such as crude oil prices, regulatory changes, and travel demand fluctuations, the current put option interest may also represent hedging strategies by institutional investors seeking to mitigate downside risks.

Expiry Patterns and Investor Positioning

The concentration of put option activity at the ₹5,000 strike price for the 27 Jan 2026 expiry suggests that traders are focusing on a near-term timeframe to express bearish views or protect long positions. The strike price is close to the current market price, indicating that the options are near-the-money and thus more sensitive to price movements.

Open interest of nearly 5,000 contracts at this strike is significant, signalling that a sizeable number of investors expect the stock to either remain below this level or are actively hedging against a potential decline. This could lead to increased volatility as expiry approaches, especially if the stock price tests this critical level.

Implications for Investors and Traders

The heavy put option activity in Interglobe Aviation signals a cautious or bearish stance among market participants. For investors holding the stock, this may be a warning to reassess risk exposure and consider protective strategies such as buying puts or tightening stop-loss levels.

Traders may view the elevated open interest and turnover in puts as an opportunity to capitalise on potential volatility, especially as the January expiry approaches. The proximity of the strike price to the current market value increases the likelihood of significant option price movements in response to any news or market shifts.

However, it is important to balance this bearish positioning with the airline's long-term prospects and sector dynamics. While short-term headwinds exist, the airline industry often experiences cyclical recoveries, and Interglobe Aviation remains a dominant player with a large market capitalisation of ₹1,93,908 crores.

Investors should monitor upcoming quarterly results, fuel price trends, and travel demand indicators to better gauge the stock's trajectory.

Conclusion

Interglobe Aviation Ltd's recent surge in put option trading at the ₹5,000 strike for the 27 Jan 2026 expiry reflects growing bearish sentiment and hedging activity. Coupled with a mojo grade downgrade and technical weakness, the stock faces near-term challenges that investors and traders must carefully navigate. While the airline sector remains sensitive to external factors, the current market signals suggest caution is warranted in managing exposure to this large-cap stock.

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