Heavy Put Option Trading Highlights Bearish Sentiment
On 1 February 2026, National Aluminium Company Ltd emerged as the most active stock in put options trading, with 8,351 contracts changing hands at the ₹350 strike price expiring on 24 February 2026. The turnover for these put options reached a substantial ₹7,077.47 lakhs, underscoring the scale of bearish bets or protective hedges being placed by market participants. Open interest currently stands at 1,937 contracts, indicating sustained interest in downside protection or speculative short positions.
The underlying stock price at the time was ₹353.90, just marginally above the ₹350 strike, suggesting that traders are positioning for a potential decline below this level in the near term. This activity is particularly notable given the stock’s recent price action and sector dynamics.
Price Performance and Market Context
National Aluminium Company Ltd has underperformed its sector, the Aluminium & Aluminium Products segment, by 3.01% on the day. The stock has been on a downward trajectory for two consecutive sessions, losing 16.94% over this period. On 1 February, it opened sharply lower with a gap down of 8.42%, hitting an intraday low of ₹329.40, a 14.54% drop from the previous close. The trading range for the day was wide at ₹35.05, with heavier volumes concentrated near the lower price levels, indicating selling pressure.
Despite the recent weakness, the stock price remains above its 50-day, 100-day, and 200-day moving averages, though it is trading below the shorter-term 5-day and 20-day averages. This mixed technical picture suggests that while the longer-term trend remains intact, short-term momentum has turned negative.
The Aluminium & Aluminium Products sector itself has declined by 5.13% on the day, reflecting broader headwinds in the non-ferrous metals space. Meanwhile, the benchmark Sensex has marginally gained 0.19%, highlighting the sector-specific nature of the weakness in NATIONALUM.
Investor Participation and Liquidity
Investor participation has notably increased, with delivery volumes rising to 1.45 crore shares on 30 January 2026, a 93% increase compared to the five-day average. This surge in delivery volume indicates heightened investor interest, possibly driven by the recent price volatility and the growing bearish sentiment.
Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting trade sizes up to ₹24.2 crore based on 2% of the five-day average traded value. This liquidity profile facilitates active options trading and allows institutional investors to execute hedging strategies efficiently.
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Mojo Score and Analyst Ratings
National Aluminium Company Ltd holds a robust Mojo Score of 80.0, reflecting strong fundamentals and positive outlook. The Mojo Grade was recently upgraded from Buy to Strong Buy on 11 November 2025, signalling improved confidence in the stock’s medium to long-term prospects. Despite the current short-term weakness and bearish option positioning, the company’s market cap of ₹64,659 crore places it firmly in the mid-cap category, attracting institutional interest.
The stock’s Market Cap Grade is 2, indicating moderate size and liquidity relative to its sector peers. This rating supports active trading and options market participation, as evidenced by the recent surge in put option volumes.
Expiry Patterns and Strike Price Significance
The 24 February 2026 expiry date is the focal point for the heightened put option activity. The ₹350 strike price is particularly significant as it sits just below the current market price, making it a key level for traders to watch. The concentration of open interest and traded contracts at this strike suggests that investors are either hedging existing long positions against a potential downside or speculating on a further decline.
Such positioning often precedes increased volatility around expiry dates, as traders adjust their portfolios and roll over positions. The wide intraday trading range and heavy volume near the lows on 1 February support the view that the market is bracing for potential downside risk in the near term.
Sectoral and Macro Considerations
The non-ferrous metals sector has faced pressure due to a combination of global commodity price fluctuations, demand concerns, and geopolitical uncertainties. Aluminium prices have been volatile, impacting companies like National Aluminium Company Ltd. The sector’s 5.13% decline on the day underscores these challenges.
Investors are increasingly using options to manage risk amid this uncertainty. The surge in put option activity in NATIONALUM is consistent with a broader trend of cautious positioning in cyclical commodity stocks, where downside protection is paramount.
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Investor Implications and Outlook
For investors, the heavy put option activity at the ₹350 strike price ahead of the 24 February expiry is a clear signal to monitor downside risks closely. The stock’s recent sharp declines and underperformance relative to its sector suggest that caution is warranted in the short term.
However, the strong Mojo Score and recent upgrade to Strong Buy indicate that the company’s fundamentals remain solid, and the current weakness may present a tactical opportunity for long-term investors to accumulate at more attractive valuations.
Traders should watch for price action around the ₹350 level and expiry dynamics, as these will likely dictate near-term volatility. Hedging strategies using put options appear to be a preferred tool for managing risk in this environment.
Summary
National Aluminium Company Ltd’s surge in put option volumes and open interest at the ₹350 strike price reflects growing bearish sentiment and hedging activity amid recent price weakness. The stock’s underperformance relative to its sector and the broader market, combined with increased investor participation, highlights a cautious market stance. While short-term risks are elevated, the company’s strong fundamentals and upgraded rating suggest potential for recovery beyond the immediate horizon.
Investors and traders alike should remain vigilant of expiry-related volatility and sectoral developments as they navigate this evolving landscape.
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