Reliance Industries Sees Heavy Put Option Activity Amid Bearish Hedging Ahead of January Expiry

Put Option Activity Highlights

On 31 December 2025, Reliance Industries Ltd (NSE: RELIANCE) recorded a significant surge in put option volumes, with 991 contracts traded at the ₹1,550 strike price expiring on 27 January 2026. This strike price is marginally above the current underlying stock price of ₹1,545.5, indicating that investors are positioning for potential downside or seeking protection close to the prevailing market level. The turnover for these put options reached ₹11.41 crores, reflecting robust liquidity and active participation.

Open interest in these puts stands at 2,455 contracts, suggesting that a sizeable number of traders are maintaining bearish bets or hedges rather than merely engaging in short-term speculative trades. This elevated open interest, combined with the high volume, points to a growing consensus among some market participants that downside risk may be imminent or that they are prudently managing portfolio risk amid recent volatility.

Stock Price Context and Technical Positioning

Reliance Industries is currently trading close to its 52-week high, just 2.16% shy of the peak price of ₹1,581.3. The stock has shown resilience by gaining after two consecutive days of decline, signalling a potential short-term trend reversal. However, the price action remains within a narrow trading range of ₹8.7, reflecting cautious investor sentiment.

Technically, the stock price is positioned above its 50-day, 100-day, and 200-day moving averages, which generally indicates a medium- to long-term bullish trend. Yet, it remains below the 5-day and 20-day moving averages, suggesting some near-term consolidation or hesitation among traders. This mixed technical picture may be contributing to the increased put option interest as investors seek to hedge against possible short-term corrections.

Market and Sector Performance

On the day of the options surge, Reliance Industries posted a modest gain of 0.49%, slightly underperforming the oil sector’s 0.56% rise but outperforming the broader Sensex index, which advanced 0.17%. This relative performance underscores the stock’s importance within the oil sector and the broader market, where it holds a commanding market capitalisation of ₹20,93,878.91 crores, categorising it as a large-cap heavyweight.

Investor participation has been rising, with delivery volumes on 30 December reaching 51.4 lakh shares, a 36.9% increase over the five-day average. This heightened activity suggests growing conviction among long-term investors, even as short-term option traders hedge their positions.

Mojo Score and Rating Upgrade

Reliance Industries currently holds a Mojo Score of 70.0, reflecting a strong buy recommendation. This is an upgrade from its previous Hold rating, which was revised on 3 November 2025. The improved grade underscores the company’s robust fundamentals, market leadership in the oil sector, and positive outlook despite near-term volatility. The Market Cap Grade of 1 further confirms its status as a large-cap stock with significant institutional interest and liquidity.

Implications of Put Option Interest

The heavy put option activity at the ₹1,550 strike price expiring in late January suggests that investors are either hedging existing long positions or speculating on a potential price correction. Given the stock’s proximity to its 52-week high and the mixed signals from short-term moving averages, this cautious stance is understandable.

Put options serve as insurance against downside risk, and the elevated open interest indicates that many traders are maintaining these protective positions rather than closing them out. This could imply expectations of increased volatility or a possible pullback in the near term, especially as the expiry date approaches.

However, the underlying fundamentals and the recent upgrade in rating suggest that any correction may be temporary, with the stock likely to resume its upward trajectory once short-term uncertainties subside.

Expiry Patterns and Investor Strategy

The January 27 expiry is a key date for options traders, as it marks the end of the first month of the new calendar year and often sets the tone for subsequent market movements. The concentration of put options at the ₹1,550 strike price indicates that investors are keenly watching this level as a critical support zone.

Given the stock’s narrow trading range and recent trend reversal, the market appears to be in a state of cautious equilibrium. Investors utilising put options may be aiming to protect gains accumulated over the past year or to capitalise on potential short-term dips without fully exiting their positions.

For long-term investors, this environment calls for careful monitoring of price action and volume trends, as well as staying informed on sectoral developments in the oil industry, which can influence Reliance’s performance significantly.

Conclusion: Balancing Caution with Confidence

Reliance Industries Ltd’s surge in put option activity ahead of the January expiry reflects a nuanced market outlook. While the stock’s fundamentals remain strong and its rating has been upgraded to Buy, the options market reveals a layer of caution among traders wary of near-term volatility. This duality is typical for large-cap stocks trading near all-time highs, where prudent hedging complements ongoing bullish sentiment.

Investors should weigh the protective signals from options data alongside the company’s solid financial health and sector leadership. The current environment favours a balanced approach, combining selective accumulation with risk management strategies to navigate potential fluctuations.

As Reliance Industries continues to command significant market attention, its options activity will remain a valuable barometer for investor sentiment and risk appetite in the oil sector and broader market.

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