ONGC Sees Heavy Put Option Activity Amid Bearish Sentiment Ahead of January Expiry

Put Option Surge Highlights Investor Caution

Data from the derivatives market reveals that ONGC’s put options with a strike price of ₹240 expiring on 27 January 2026 have emerged as the most actively traded contracts. A total of 3,262 contracts changed hands, generating a turnover of approximately ₹250.28 lakhs. Open interest stands at 1,539 contracts, indicating sustained investor interest in downside protection at this level.

The underlying stock price closed near ₹239.10, just below the ₹240 strike, which is a critical psychological and technical level. This proximity often encourages traders to buy puts as a hedge against further declines or to speculate on a bearish move.

Price Action and Technical Context

Despite opening with a gap up of 2.21% and touching an intraday high of ₹246.80, ONGC ended the day with a decline of 0.87%, underperforming its sector by 0.49%. The stock’s movement remains mixed, trading above its 5-day and 20-day moving averages but still below the longer-term 50-day, 100-day, and 200-day averages. This technical setup suggests short-term strength but longer-term resistance, which may be prompting investors to hedge with puts.

Investor participation has also waned, with delivery volumes falling by 32.11% compared to the five-day average, signalling reduced conviction among buyers. The stock’s high dividend yield of 5.17% continues to attract income-focused investors, but the recent price softness and option activity indicate caution.

Market Capitalisation and Mojo Rating

ONGC remains a large-cap stalwart with a market capitalisation of ₹3,01,108.98 crores. However, its Mojo Score has recently been downgraded from a Buy to a Hold, with a current score of 64.0 as of 8 December 2025. This reflects a tempered outlook by analysts, balancing the company’s strong fundamentals against near-term headwinds in the oil sector and broader market volatility.

Implications of Put Option Activity for Investors

The heavy put option volume at the ₹240 strike price suggests that market participants are positioning for potential downside or are actively hedging existing long positions. This is a common strategy in volatile sectors such as oil, where geopolitical risks, fluctuating crude prices, and regulatory changes can rapidly impact share prices.

Given the open interest and turnover figures, it is evident that institutional investors and traders are taking a cautious stance. The expiry date of 27 January 2026 is also significant, as it coincides with the end of the current quarterly options cycle, often a period of heightened volatility and position adjustments.

Sector and Market Comparison

While ONGC’s one-day return was -0.87%, the oil sector marginally gained 0.08%, and the broader Sensex declined by 0.15%. This relative underperformance, coupled with the put option activity, underscores a more bearish or defensive sentiment specific to ONGC rather than the sector as a whole.

Liquidity remains adequate, with the stock’s average traded value supporting trade sizes up to ₹4.14 crores, ensuring that option and stock trades can be executed without significant market impact.

Outlook and Strategic Considerations

Investors should closely monitor ONGC’s price action and option market dynamics in the coming weeks. The concentration of put options at ₹240 suggests a key support level, but also a threshold below which bearish sentiment may intensify. Should the stock breach this level decisively, further downside could be expected, potentially validating the hedging strategies currently in place.

Conversely, a rebound above the 50-day moving average and sustained sector strength could alleviate bearish pressures, prompting a reassessment of the stock’s Hold rating. The high dividend yield remains an attractive feature for income investors, but capital appreciation prospects appear constrained in the near term.

Market participants are advised to weigh these factors carefully, considering both the technical signals and fundamental outlook before adjusting their positions.

Summary

In summary, the pronounced put option activity in ONGC ahead of the 27 January 2026 expiry highlights a cautious market stance amid mixed technical signals and sector dynamics. The stock’s recent downgrade to Hold by analysts reflects this balanced view, with investors employing options to hedge against potential downside risks. Monitoring open interest trends and price movements around the ₹240 strike will be crucial for anticipating the stock’s near-term trajectory.

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