Reliance Industries Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Surge Highlights Investor Caution

The most active put options for Reliance Industries are concentrated at the ₹1,400 strike price, with 5,214 contracts traded recently. This surge in put buying has generated a turnover of approximately ₹186.4 lakhs, while open interest stands robust at 6,071 contracts. Given the underlying stock price of ₹1,443.9, the strike price represents a modest downside buffer, suggesting investors are positioning for a potential correction or seeking protection against near-term volatility.

Such elevated put activity often indicates a hedging strategy by institutional investors or speculative bearish bets by traders anticipating a pullback. The expiry date of 24 February 2026 is less than three weeks away, intensifying the focus on short-term price movements and volatility expectations.

Stock Performance and Technical Context

Reliance Industries underperformed its sector by 0.3% on the latest trading day, declining 0.80% compared to the sector’s 0.31% fall and the Sensex’s 0.50% drop. This marks a reversal after three consecutive days of gains, signalling a potential shift in momentum. The stock’s price remains above its 5-day, 20-day, and 200-day moving averages but is trading below the 50-day and 100-day averages, indicating mixed technical signals and a possible consolidation phase.

Investor participation has notably declined, with delivery volumes falling by 52.39% to 52.5 lakh shares on 4 February 2026 compared to the five-day average. This drop in delivery volume suggests reduced conviction among buyers, which may be contributing to the cautious stance reflected in options markets.

Market Capitalisation and Quality Assessment

Reliance Industries commands a large market capitalisation of ₹19,58,622 crore, underscoring its status as a blue-chip stock within the oil sector. Despite its size and influence, MarketsMOJO’s recent downgrade to a Hold rating with a Mojo Score of 62.0 reflects tempered expectations. The downgrade from a Buy rating on 6 January 2026 was driven by concerns over near-term earnings growth and sectoral headwinds, including fluctuating crude prices and regulatory uncertainties.

Options Activity as a Barometer of Market Sentiment

The concentration of put options at the ₹1,400 strike price, which is roughly 3.5% below the current market price, suggests that traders are bracing for a moderate downside move. Open interest data confirms that these positions are not fleeting but represent sustained interest, possibly from institutional players seeking downside protection or speculative traders betting on a correction.

Put option volumes exceeding call volumes at this strike price further reinforce the bearish undertone. This pattern is consistent with a hedging strategy, where investors holding long positions in Reliance stock buy puts to limit losses in case of a downturn. Alternatively, it may reflect outright bearish bets anticipating a decline in the stock’s price before the February expiry.

Sectoral and Macro Influences

Reliance Industries operates within the oil sector, which has experienced volatility due to fluctuating crude oil prices, geopolitical tensions, and evolving energy policies. These external factors have contributed to the cautious stance among investors, as reflected in the options market. The sector’s 1-day return of -0.31% and the Sensex’s broader decline indicate a risk-off mood prevailing in the market, which often drives increased demand for protective put options.

Moreover, the stock’s liquidity profile remains strong, with a 5-day average traded value supporting trade sizes up to ₹41.73 crore, ensuring that options and stock trades can be executed efficiently without significant price impact.

Implications for Investors and Traders

For investors, the heightened put option activity serves as a cautionary signal to reassess risk exposure in Reliance Industries. The downgrade to Hold and the mixed technical indicators suggest that the stock may face near-term headwinds. Investors with long positions might consider protective strategies such as buying puts or tightening stop-loss levels to mitigate downside risk.

Traders, on the other hand, may find opportunities in the volatility implied by the options market. The concentration of open interest near the ₹1,400 strike price could lead to increased price sensitivity around this level as expiry approaches. Monitoring changes in open interest and volume can provide insights into evolving market sentiment and potential price movements.

It is also important to consider broader market conditions and sectoral trends, as Reliance’s performance is closely tied to oil price dynamics and regulatory developments. A sustained recovery in crude prices or positive policy announcements could alleviate bearish pressures, while adverse developments may exacerbate downside risks.

Conclusion

Reliance Industries Ltd’s recent surge in put option activity ahead of the 24 February 2026 expiry highlights a growing bearish sentiment and hedging demand among market participants. Despite its large-cap stature and strong liquidity, the stock faces mixed technical signals and a recent rating downgrade, prompting investors to adopt a more cautious stance. The ₹1,400 strike price has emerged as a key focal point for options traders, reflecting expectations of moderate downside risk in the near term. As expiry approaches, close monitoring of options market dynamics alongside fundamental and technical factors will be crucial for informed decision-making.

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