ONGC Sees Heavy Put Option Activity Amid Mixed Market Signals

Put Option Activity Highlights

Data from the derivatives market reveals that ONGC’s put options with strike prices of ₹240 and ₹245 have attracted the highest trading volumes. Specifically, the ₹245 strike put options saw 5,108 contracts traded, generating a turnover of ₹286.18 lakhs, while the ₹240 strike put options recorded 3,801 contracts with a turnover of ₹100.06 lakhs. Open interest stands at 2,100 and 3,260 contracts respectively for these strikes, indicating sustained interest and potential build-up of bearish bets or hedges ahead of the expiry on 27 Jan 2026.

The underlying stock price currently hovers around ₹248.56, placing these strike prices just below the market price, which is typical for protective puts or speculative bets anticipating a near-term correction.

Stock Performance and Technical Context

Contrary to the heavy put activity, ONGC’s recent price action has been robust. The stock has gained 1.93% in the last trading session, outperforming the Oil sector’s 0.77% gain and the broader Sensex, which declined by 0.09%. Over the past four consecutive trading days, ONGC has delivered a cumulative return of 7.03%, signalling strong momentum.

Technical indicators reinforce this bullish trend, with the stock trading above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. The intraday high touched ₹249.29, a 2.26% increase on the day, underscoring positive investor sentiment.

Investor participation has also surged, with delivery volumes on 13 Jan reaching 1.2 crore shares, a 106.28% increase compared to the five-day average. This heightened activity suggests growing conviction among long-term investors, supported by a healthy dividend yield of 5.12% at current prices.

Interpreting the Put Option Surge

The spike in put option volumes at strikes ₹240 and ₹245, both near-the-money levels, can be interpreted in multiple ways. One plausible explanation is that institutional investors and traders are employing puts as a hedge against the recent strong rally, protecting gains in the event of a short-term pullback. This is a common strategy in volatile sectors like Oil, where geopolitical and commodity price risks can trigger sudden price swings.

Alternatively, the elevated open interest and turnover could signal increased speculative bearish positioning. Traders might be anticipating profit-taking or a correction following the stock’s 7% gain over four days. The expiry date of 27 Jan 2026 is also significant, as it coincides with the end of the current monthly options cycle, a period often marked by heightened volatility and position adjustments.

Fundamental and Market Context

ONGC remains a heavyweight in the Oil sector with a market capitalisation of ₹3,09,412 crore, classified as a large-cap stock. The company’s Mojo Score of 74.0 and an upgraded Mojo Grade from Hold to Buy as of 13 Jan 2026 reflect improving fundamentals and positive analyst sentiment. The Market Cap Grade of 1 further underscores its dominant position in the industry.

Despite the bullish technicals and fundamental upgrades, the Oil sector’s inherent cyclicality and sensitivity to crude oil price fluctuations warrant cautious positioning. The recent outperformance relative to the sector and Sensex may invite profit-booking, which could explain the surge in put option interest as a form of downside protection.

Liquidity and Trading Considerations

Liquidity metrics for ONGC remain favourable, with the stock’s traded value supporting sizeable trade sizes up to ₹6.23 crore based on 2% of the five-day average traded value. This ensures that both equity and derivatives traders can enter and exit positions with relative ease, an important factor for institutional participants managing large portfolios.

Outlook and Investor Implications

For investors, the current scenario presents a nuanced picture. ONGC’s strong price momentum and fundamental upgrades suggest a positive medium-term outlook. However, the pronounced put option activity signals that market participants are either hedging against potential near-term volatility or positioning for a correction.

Investors should monitor the stock’s price action closely as the 27 Jan expiry approaches, paying attention to changes in open interest and volume in both call and put options. A sustained increase in put open interest coupled with price weakness could confirm a shift towards bearish sentiment, while a decline in put volumes might indicate that hedging demand is easing.

Given ONGC’s high dividend yield of 5.12% and improving Mojo Grade, long-term investors may find the stock attractive for accumulation, particularly on dips. Traders, meanwhile, should consider the implications of option expiry dynamics and sector-specific risks before initiating fresh positions.

Summary

In summary, ONGC’s derivatives market activity reveals a complex interplay of bullish fundamentals and cautious market positioning. The heavy put option volumes at near-the-money strikes ahead of the January expiry highlight a market preparing for potential volatility, despite the stock’s recent gains and technical strength. This duality underscores the importance of a balanced approach, combining fundamental analysis with vigilant monitoring of market sentiment indicators.

As the Oil sector continues to navigate global energy dynamics and commodity price fluctuations, ONGC’s stock and options activity will remain a key barometer for investor confidence and risk appetite in this space.

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