Rs 1,350 Puts — 0.9% Below Current Price — Draw 5,850 Contracts on Reliance Industries Ltd

Put Options Event and Cash Market Context

On 25 May 2026, Reliance Industries Ltd saw significant put option activity with 5,850 contracts traded at the Rs 1,350 strike and 7,237 contracts at the Rs 1,360 strike, both expiring on 26 May 2026. The turnover for these strikes was ₹110.86 lakhs and ₹255.47 lakhs respectively, indicating substantial premium flow. The underlying stock price stood at Rs 1,361.80, placing the Rs 1,350 strike just 0.9% out-of-the-money (OTM) and the Rs 1,360 strike nearly at-the-money (ATM).

This surge in put contracts comes as the stock has gained 0.84% over the last two days, trading in a narrow range of Rs 13.1 on the day, and showing a modest 0.49% increase on 25 May. The stock remains above its 5-day moving average but below its 20-day, 50-day, 100-day, and 200-day moving averages, reflecting a mixed technical backdrop. Delivery volumes have declined sharply by 54.15% compared to the 5-day average, signalling reduced investor participation in the cash market.

The combination of rising prices and heavy put activity raises the question: is this put buying a protective hedge or a bearish conviction?

Strike Price Analysis: Moneyness and Intent

The Rs 1,350 strike is just 0.9% below the current price, placing it very close to ATM territory. The Rs 1,360 strike is effectively ATM. Such proximity suggests that these puts are positioned to protect against a minor pullback rather than a deep decline. If the put buyers were purely bearish, one might expect heavier activity at strikes further below the current price, reflecting expectations of a more significant drop.

Given the expiry is the very next day, the time value of these options is minimal, and the premium paid largely reflects intrinsic value and immediate downside protection. The closeness of the strike to the underlying price indicates that the put activity is likely aimed at guarding recent gains or limiting short-term downside risk rather than outright bearish speculation.

Alternatively, the high turnover and open interest at these strikes could also indicate put writing, where sellers collect premium betting the stock will not fall below these levels by expiry. However, the relatively high open interest compared to contracts traded (2,542 OI at Rs 1,350 strike vs 5,850 contracts traded) suggests fresh positioning rather than predominantly put writing.

This leads to a layered interpretation: are traders hedging existing long positions or positioning for a short-term correction?

Interpretation Framework: Hedging, Bearish Positioning, or Put Writing?

Put options inherently carry ambiguous signals. When a stock is rising or stable, OTM or ATM put buying often reflects hedging activity, protecting gains from a potential pullback. Conversely, if the stock were falling sharply, ATM or in-the-money (ITM) put buying would more clearly signal bearish bets.

In this case, Reliance Industries Ltd has gained modestly over two days and trades above its 5-day moving average, supporting the hedging interpretation. The put strikes correspond roughly to a support zone just below the 5-day MA but above longer-term averages, consistent with protective positioning rather than directional bearishness.

Put writing as a bullish strategy is less likely here given the high volume of contracts traded relative to open interest, which points to fresh buying rather than premium collection. However, some put selling may be occurring, especially at the Rs 1,360 strike with higher open interest (3,796), indicating a mix of strategies in play.

Open Interest and Contracts Analysis

The Rs 1,350 strike shows 2,542 open interest against 5,850 contracts traded on the day, a ratio of approximately 2.3:1. This suggests a significant portion of the activity represents fresh positions rather than rollovers or closing trades. The Rs 1,360 strike has even higher open interest at 3,796 with 7,237 contracts traded, indicating active engagement at this near-ATM level.

Such fresh positioning at strikes close to the current price supports the view that traders are either hedging existing long exposure or speculating on short-term volatility rather than outright bearish bets. The relatively balanced open interest and turnover also imply a dynamic market with both buyers and sellers actively managing risk.

Cash Market Context: Technicals and Delivery Volumes

Reliance Industries Ltd trades above its 5-day moving average but remains below its 20-day, 50-day, 100-day, and 200-day averages, indicating a short-term uptrend within a longer-term consolidation or downtrend. The Rs 1,350 put strike roughly aligns with a support zone below the 5-day MA but above the 50-day MA, consistent with a technical hedge against a mild pullback.

Delivery volumes have fallen by 54.15% compared to the 5-day average, signalling weaker investor participation in the rally. This thinning participation may be prompting traders to hedge their positions with puts, protecting against a potential reversal in the absence of strong delivery-backed conviction. does this reduced delivery volume undermine the sustainability of the recent gains? The options data suggests caution rather than outright pessimism.

Conclusion: Protective Hedging More Likely Than Bearish Bet

The heavy put option activity on Reliance Industries Ltd at strikes just below and at the current price, combined with a modestly rising stock and declining delivery volumes, points towards hedging of existing long positions rather than outright bearish positioning. The proximity of the strikes to the underlying price and the expiry imminence further support this protective interpretation.

While put writing cannot be entirely ruled out, the volume and open interest data suggest fresh buying dominates, consistent with risk management amid a cautious market backdrop. The stock’s position above the 5-day moving average but below longer-term averages indicates a technical environment where traders seek to guard against short-term pullbacks without abandoning longer-term exposure.

Given these factors, should investors view this put activity as a signal to hedge or a warning of deeper weakness ahead?

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