ONGC Sees Heavy Put Option Activity Amid Bearish Market Sentiment

Put Option Activity Highlights

Data from the derivatives market reveals that ONGC’s put options with a strike price of ₹230 and expiry date of 30 December 2025 have attracted significant attention. A total of 5,365 contracts were traded, generating a turnover of approximately ₹388.69 lakhs. The open interest for these contracts stands at 1,797, indicating sustained investor interest in downside protection or speculative bearish bets at this strike level.

The underlying value of ONGC at the time of this activity was ₹231.49, placing the ₹230 strike price close to the current market price. This proximity suggests that traders are positioning for potential downward movement or volatility in the near term, with the December expiry acting as a focal point for option expiry-related adjustments.

Price Performance and Market Context

ONGC’s recent price action has been subdued relative to its sector and broader market indices. The stock underperformed its oil sector peers by 2.4% on the day, while the Sensex declined by 0.49%. Over the past four consecutive trading sessions, ONGC has recorded a cumulative return of -3.85%, reflecting persistent selling pressure.

Intraday, the stock touched a low of ₹230.11, down 3.32% from previous levels, with the weighted average traded price skewed towards the lower end of the day’s range. This price behaviour aligns with the heightened put option activity, as market participants appear to be hedging against further downside or speculating on a decline.

Technical indicators also point to a bearish trend, with ONGC trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. Such positioning often signals a lack of short-term momentum and may encourage protective strategies among investors.

Investor Participation and Liquidity

Investor participation metrics show a decline in delivery volumes, with 26.9 lakh shares delivered on 12 December, representing a 43.92% reduction compared to the five-day average. This drop in delivery volume could indicate cautiousness among long-term holders or a shift towards shorter-term trading strategies, including options.

Despite this, ONGC maintains sufficient liquidity, with the stock’s traded value supporting trade sizes up to ₹3.07 crore based on 2% of the five-day average traded value. This liquidity facilitates active options trading and allows market participants to execute sizeable hedging or speculative positions without significant market impact.

Dividend Yield and Market Capitalisation

ONGC offers a dividend yield of 5.25% at current price levels, which remains attractive for income-focused investors despite the recent price softness. The company’s market capitalisation stands at ₹2,99,725 crore, categorising it firmly as a large-cap stock within the oil sector.

Such a sizeable market cap and dividend yield typically provide a degree of stability, yet the current option market activity suggests that investors are preparing for potential near-term volatility or downside risk.

Expiry Patterns and Investor Sentiment

The concentration of put option contracts expiring on 30 December 2025 highlights a key expiry cycle that market participants are monitoring closely. The strike price of ₹230, being near the current market price, acts as a psychological and technical support level. The elevated open interest at this strike suggests that traders are either hedging existing long positions or speculating on a price correction.

Such positioning is consistent with a cautious or bearish market sentiment towards ONGC in the short term. The stock’s underperformance relative to its sector and the broader market, combined with technical indicators and declining delivery volumes, reinforces this perspective.

Implications for Investors

For investors in ONGC, the heavy put option activity signals a need to closely monitor price movements and market developments. The options market often acts as a barometer of investor expectations, and the current data points to heightened caution.

Those holding long positions may consider the potential for increased volatility or downside risk, while traders might view the put options as a tool for hedging or capitalising on bearish trends. The stock’s dividend yield and large-cap status continue to offer some defensive qualities, but the near-term technical outlook remains subdued.

Conclusion

Oil & Natural Gas Corporation Ltd. is currently experiencing significant put option activity, reflecting a cautious stance among investors as the stock trades below key moving averages and faces downward pressure. The concentration of put contracts near the ₹230 strike price with December expiry underscores the market’s focus on potential downside risk in the near term.

While the stock’s dividend yield and large-cap status provide some defensive appeal, the technical and options market data suggest that investors are preparing for volatility and possible price corrections. Monitoring open interest trends and expiry dynamics will be crucial for understanding evolving market sentiment towards ONGC.

Investors and traders alike should weigh these factors carefully when considering their exposure to this prominent oil sector stock in the current market environment.

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