Reliance Industries Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

On 27 January 2026 expiry, Reliance Industries saw two strike prices emerge as the most active in put options trading: ₹1,370 and ₹1,380. The ₹1,380 strike price led with 3,429 contracts traded, generating a turnover of ₹133.05 lakhs and an open interest of 1,829 contracts. The ₹1,370 strike followed with 2,229 contracts traded, turnover of ₹42.80 lakhs, and open interest of 1,024 contracts. These strike prices are notably close to the underlying stock price of ₹1,385.7, indicating that traders are positioning for potential downside or hedging against near-term volatility.

The substantial open interest at these strikes suggests that investors are either buying protection against a decline or speculating on a price drop. The concentration of activity near the money reflects a cautious market stance, with participants possibly anticipating a correction or increased volatility in Reliance’s shares.

Stock Performance and Technical Context

Reliance Industries has underperformed its sector by 0.53% on the day, with a 1-day return of -0.18% compared to the oil sector’s 0.39% gain and the Sensex’s 0.37% rise. The stock has recently reversed a two-day losing streak but remains below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a bearish technical setup. This persistent weakness in price action aligns with the increased put option interest, reinforcing the notion of investor caution.

Investor participation has also waned, with delivery volumes on 23 January falling by 40.31% against the five-day average, indicating reduced conviction among buyers. Despite this, liquidity remains adequate, with the stock’s average traded value supporting trade sizes up to ₹44.17 crores, ensuring that option and stock trades can be executed without significant market impact.

Mojo Score and Rating Revision

MarketsMOJO’s latest assessment assigns Reliance Industries a mojo score of 62.0, categorising it as a Hold. This represents a downgrade from a Buy rating issued on 6 January 2026. The downgrade reflects a reassessment of the company’s near-term prospects amid sectoral headwinds and technical weakness. The market cap grade remains at 1, underscoring Reliance’s status as a large-cap heavyweight with a market capitalisation of ₹18,75,533 crores.

Expiry Patterns and Market Implications

The expiry date of 27 January 2026 is a critical juncture for options traders, as it marks the settlement of these contracts and often triggers heightened volatility. The clustering of put option activity at strikes just below and near the current price suggests that market participants are bracing for a possible pullback or are actively hedging existing long positions in Reliance shares.

Such positioning can also be interpreted as a defensive stance amid broader oil sector uncertainties, including fluctuating crude prices, regulatory developments, and global economic factors. The oil sector’s sensitivity to geopolitical events and commodity price swings often leads to increased option market activity as investors seek to manage risk.

Bearish Positioning and Hedging Strategies

The dominance of put options in the most active contracts points to a tilt towards bearish sentiment or protective hedging. Investors holding Reliance shares may be purchasing puts to limit downside risk, especially given the stock’s technical weakness and recent underperformance relative to its sector and benchmark indices.

Alternatively, speculative traders might be betting on a near-term decline, leveraging the leverage and limited capital outlay that options provide. The open interest figures reinforce that these are not isolated trades but part of a broader market consensus or strategy.

Outlook and Investor Considerations

While Reliance Industries remains a dominant player in the oil sector with a robust market capitalisation, the current option market activity and technical indicators suggest caution. Investors should closely monitor price action around the ₹1,370-₹1,380 range and watch for any shifts in open interest or volume that could signal a change in market sentiment.

Given the downgrade to Hold and the stock’s position below key moving averages, a conservative approach may be warranted. Those with exposure to Reliance might consider protective strategies or evaluate alternative investments within the sector or broader market.

Conclusion

The surge in put option trading for Reliance Industries ahead of the 27 January expiry highlights a market environment marked by caution and defensive positioning. With the stock trading below all major moving averages and a recent downgrade in mojo rating, investors are signalling concerns over near-term downside risks. The concentration of put contracts at strikes close to the current price underscores the importance of monitoring option market dynamics as a barometer of investor sentiment.

For market participants, understanding these option flows provides valuable insight into potential price movements and risk management strategies. Reliance’s large-cap status and sector leadership remain intact, but the current technical and options landscape advises prudence and active portfolio management.

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