Reliance Industries Sees Heavy Put Option Activity Ahead of January Expiry

Put Option Volumes and Strike Price Concentration

Data from the derivatives market reveals that Reliance Industries Ltd (NSE: RELIANCE) recorded substantial put option volumes for the expiry on 27 January 2026. The most actively traded put strike was ₹1,500, with 4,260 contracts changing hands, generating a turnover of ₹451.986 lakhs and an open interest of 7,526 contracts. This strike price is slightly below the underlying spot price of ₹1,516.8, indicating a significant level of bearish hedging or speculative positioning just beneath current market levels.

Close behind, the ₹1,510 strike saw 2,536 contracts traded with a turnover of ₹319.2824 lakhs and an open interest of 2,362 contracts. The ₹1,520 strike also attracted heavy put activity, with 2,467 contracts traded, turnover of ₹360.9221 lakhs, and open interest standing at 3,593 contracts. The clustering of put option interest around these strikes near the current price suggests investors are positioning for a possible pullback or volatility in the near term.

Market Context and Technical Indicators

Reliance Industries, a heavyweight in the oil sector with a market capitalisation of ₹20,40,290 crores, outperformed its sector by 0.4% on 7 January, gaining 0.6% compared to the sector’s 0.06% rise and the Sensex’s 0.12% decline. The stock has reversed its recent two-day decline, signalling a tentative recovery. However, technical indicators present a mixed picture: the share price remains above its 100-day and 200-day moving averages, which typically indicate long-term strength, but it is trading below its 5-day, 20-day, and 50-day moving averages, suggesting short-term weakness or consolidation.

Investor participation has notably increased, with delivery volume on 6 January reaching 1.43 crore shares, a sharp 227.12% rise over the five-day average. This heightened activity underscores growing interest and possibly increased hedging demand as investors seek to manage risk amid uncertain market conditions.

Bearish Positioning and Hedging Implications

The concentration of put option activity at strikes just below the current market price is a classic indicator of bearish sentiment or protective hedging. Traders and institutional investors may be buying puts to guard against a potential decline in Reliance’s share price, especially given the stock’s recent short-term weakness relative to its moving averages. The open interest figures, particularly the 7,526 contracts at the ₹1,500 strike, highlight significant outstanding bearish bets or hedges that could influence price dynamics as expiry approaches.

Such positioning often precedes increased volatility, as market participants adjust their exposures. If the stock price dips below these strike levels, put option holders stand to gain, potentially accelerating downward momentum. Conversely, if the stock holds above these levels, put sellers may face losses, which could limit downside.

Reliance’s Mojo Score and Analyst Ratings

Reliance Industries currently holds a Mojo Score of 62.0, categorised as a Hold, reflecting a cautious stance from analysts. This represents a downgrade from a previous Buy rating on 6 January 2026, signalling a reassessment of the stock’s near-term prospects. The market cap grade remains at 1, indicating its status as a large-cap stock with significant liquidity and institutional interest.

The downgrade aligns with the mixed technical signals and the surge in put option activity, suggesting that while the company’s fundamentals remain robust, investors are increasingly wary of short-term headwinds or sector-specific risks in the oil industry.

Liquidity and Trading Viability

Reliance’s liquidity profile supports active trading, with the stock’s turnover sufficient to accommodate trade sizes of up to ₹35.98 crores based on 2% of the five-day average traded value. This liquidity ensures that both equity and derivatives traders can execute sizeable positions without significant market impact, facilitating the observed surge in put option volumes.

Expiry Patterns and Market Outlook

The 27 January 2026 expiry is shaping up as a critical juncture for Reliance Industries. The heavy put option interest clustered around ₹1,500 to ₹1,520 strikes suggests that market participants are positioning for a potential correction or increased volatility in the coming weeks. This expiry could see significant price action as traders adjust or unwind their positions based on evolving fundamentals and technical developments.

Investors should monitor open interest changes and price movements closely, as a breach below these key strike prices could trigger further downside pressure. Conversely, a sustained recovery above short-term moving averages may alleviate bearish sentiment and reduce put option demand.

Sector and Broader Market Considerations

Reliance’s performance must also be viewed in the context of the oil sector and broader market trends. While the stock outperformed its sector and the Sensex on 7 January, the oil industry faces ongoing challenges including fluctuating crude prices, regulatory developments, and global economic uncertainties. These factors contribute to the cautious positioning reflected in the derivatives market.

Given Reliance’s dominant market position and diversified business model, the current put option activity may represent tactical hedging rather than a fundamental shift in long-term outlook. Nonetheless, investors should remain vigilant to short-term risks and adjust their portfolios accordingly.

Conclusion

The surge in put option trading in Reliance Industries Ltd ahead of the 27 January expiry highlights a growing bearish sentiment or hedging demand among investors. With significant open interest concentrated at strikes just below the current market price, the stock faces a critical test of support levels in the near term. Mixed technical signals and a recent downgrade to Hold reinforce the need for cautious optimism.

Market participants should closely track price action and derivatives data to gauge evolving sentiment and potential volatility. Reliance’s liquidity and large-cap status ensure it remains a key focus for traders and investors navigating the oil sector’s complex landscape.

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