Rs 1,340 Puts Draw 6,090 Contracts on Reliance Industries Ltd Ahead of 28 July Expiry

Put Options Event and Cash Market Context

On 20 July, Reliance Industries Ltd saw heavy put option volumes clustered around strikes close to the current market price. The Rs 1,340 strike recorded 6,090 contracts traded with a turnover of ₹63.37 crores and an open interest of 3,508 contracts. Nearby strikes at Rs 1,330 and Rs 1,320 also saw substantial activity, with 6,139 and 7,848 contracts traded respectively. The Rs 1,300 strike led volumes with 10,514 contracts but with a lower turnover of ₹34.75 crores, indicating lower premiums per contract.

The stock itself has been on a steady upward trajectory, gaining 3.4% over the past four days and trading above its 5-day, 20-day, and 50-day moving averages, though still below the 100-day and 200-day averages. Delivery volumes have surged, with 1.2 crore shares delivered on 17 July, nearly doubling the five-day average, suggesting rising investor participation in the cash market. This backdrop is crucial to interpreting the put activity — is the options market signalling caution or simply hedging gains?

Strike Price Analysis: Moneyness and Distance from Underlying

The Rs 1,340 put strike sits just 0.44% above the current underlying price of Rs 1,334.30, effectively making it an at-the-money (ATM) option. The Rs 1,330 and Rs 1,320 strikes are slightly out-of-the-money (OTM) puts, at 0.33% and 1.07% below the current price respectively, while the Rs 1,300 strike is 2.56% below the market price, clearly OTM.

This proximity to the underlying price suggests that the bulk of the put activity is concentrated around strikes that would provide immediate downside protection if the stock were to decline. The Rs 1,340 ATM puts, in particular, are likely to be the most sensitive to price movements and time decay as expiry approaches on 28 July 2026.

Interpreting the Put Activity: Bearish, Hedging, or Put Writing?

Put option activity can be ambiguous. Heavy buying of ATM or slightly OTM puts on a falling stock often signals bearish bets. However, in this case, Reliance Industries Ltd is on a short-term uptrend, which complicates the interpretation. The concentration of put contracts near the ATM strike, combined with the stock’s recent gains, suggests that much of this activity could be protective hedging by investors locking in profits or guarding against a near-term pullback.

Alternatively, some of the put volume, especially at the Rs 1,300 strike with its large contract count but lower turnover, could represent put writing. Sellers of these puts collect premiums betting that the stock will not fall below these strikes by expiry, a bullish stance consistent with the recent upward momentum. The open interest figures support this mixed picture: while the traded contracts are high, the open interest at these strikes is moderate, indicating a blend of fresh positions and adjustments to existing ones.

It is less likely that the activity represents outright bearish positioning given the stock’s steady gains and rising delivery volumes — should investors interpret this as a signal to hedge or a sign of confidence in the rally?

Open Interest and Contracts Analysis

The ratio of contracts traded to open interest provides insight into whether the activity is fresh or a reshuffling of existing positions. For the Rs 1,340 strike, 6,090 contracts traded against an open interest of 3,508, a ratio of approximately 1.74:1, indicating a significant amount of fresh activity but also some rollover or closing of positions.

At the Rs 1,320 strike, the ratio is lower at about 1.17:1 (7,848 contracts traded vs 6,717 open interest), suggesting more position adjustments than new bets. The Rs 1,300 strike shows a ratio of 1.15:1, reinforcing this view. These figures imply that while fresh hedging or speculative positions are being established, a portion of the activity is also related to managing existing exposure.

Cash Market Momentum and Technical Context

Reliance Industries Ltd has gained 3.4% over the last four sessions, trading above its 5-day, 20-day, and 50-day moving averages. However, it remains below the longer-term 100-day and 200-day averages, indicating that while short-term momentum is positive, the broader trend is still consolidating. The Rs 1,340 put strike aligns closely with the current price and sits near a technical support zone formed by the 50-day moving average, which may explain the concentration of put activity as a hedge against a pullback to this level.

Delivery volumes have risen sharply, with 1.2 crore shares delivered on 17 July, up nearly 99% from the five-day average. This increase in delivery-backed trading suggests genuine investor interest in the stock, which may reduce the likelihood of a sharp decline, supporting the interpretation that put buying is more protective than bearish.

Conclusion: Protective Hedging Dominates Put Activity

The put option activity on Reliance Industries Ltd ahead of the 28 July expiry is concentrated around strikes very close to the current market price, with significant volumes and moderate open interest. The stock’s recent gains, rising delivery volumes, and position above key short-term moving averages suggest that the bulk of this put buying is likely protective hedging rather than outright bearish speculation.

Put writing at lower strikes also points to a degree of bullishness, with sellers confident the stock will hold above these levels. While a bearish interpretation cannot be entirely ruled out, the data favours a nuanced view where investors are managing risk amid a cautiously optimistic market environment — should investors consider hedging their positions or view this as a sign of sustained confidence in the rally?

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