Put Option Activity and Market Context
On 26 December 2025, Shriram Finance recorded the most active put options among its peers, with 3,183 contracts traded at the 960 strike price. The turnover for these contracts reached approximately ₹2.17 crores, while open interest stood at 1,486 contracts. The underlying stock price was ₹961.7, placing the 960 strike price close to the current market level, which suggests that traders are positioning for potential downside or protection against near-term volatility.
The expiry date for these options is 30 December 2025, indicating that market participants are focusing on short-term risk management or speculative plays as the year-end approaches. The concentration of activity in put options, rather than calls, points to a tilt towards bearish sentiment or hedging against possible declines in the stock price.
Price Performance and Technical Indicators
Shriram Finance's stock price has experienced a reversal after six consecutive days of gains, with a one-day return of -1.04%, underperforming its sector by -0.76% and the broader Sensex by -0.85%. Despite this pullback, the stock continues to trade above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling that the longer-term trend remains intact.
However, investor participation appears to be waning, as evidenced by a 36.02% reduction in delivery volume on 24 December 2025 compared to the five-day average, with delivery volume recorded at ₹72 lakhs. This decline in active buying interest may be contributing to the cautious positioning seen in the options market.
Liquidity and Market Capitalisation
Shriram Finance is classified as a large-cap company with a market capitalisation of approximately ₹1,83,141 crores. The stock's liquidity supports sizeable trades, with the capacity to handle trade sizes up to ₹41.1 crores based on 2% of the five-day average traded value. This level of liquidity facilitates active options trading and allows institutional investors to implement complex hedging strategies efficiently.
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Investor Sentiment and Hedging Implications
The predominance of put option contracts at the 960 strike price suggests that investors are either hedging existing long positions or speculating on a potential decline in Shriram Finance's share price. Given the proximity of the strike price to the current market value, these puts serve as a near-the-money protection mechanism, which is a common strategy to mitigate downside risk in volatile market conditions.
Such activity often reflects a cautious market outlook, especially as the expiry date approaches. Traders may be anticipating increased volatility due to macroeconomic factors, sector-specific developments, or company-specific news that could influence the stock's trajectory in the short term.
Sector and Broader Market Comparison
Within the NBFC sector, Shriram Finance's one-day return of -1.04% contrasts with the sector's more modest decline of -0.13%, indicating relative underperformance. The Sensex also recorded a slight dip of -0.19% on the same day. This divergence may be contributing to the heightened put option interest as investors seek to manage risk amid sectoral headwinds.
Despite the recent pullback, the stock's position above multiple moving averages suggests that the medium to long-term trend remains positive. However, the reduced delivery volume signals a potential hesitation among investors to commit to fresh positions, which aligns with the increased demand for downside protection through options.
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Outlook and Investor Considerations
Investors monitoring Shriram Finance should consider the implications of the active put option trading as a signal of market caution. While the stock maintains a position above key moving averages, the recent reversal and diminished delivery volumes suggest that some market participants are preparing for potential near-term volatility.
Given the company's large-cap status and liquidity, options remain a viable tool for both hedging and speculative purposes. Market participants may continue to watch the evolution of open interest and volume in put options as indicators of shifting sentiment ahead of the 30 December expiry.
Overall, the data points to a nuanced market view where longer-term fundamentals may remain intact, but short-term risk management is taking precedence among traders and investors alike.
Summary
Shriram Finance's recent options market activity highlights a significant focus on downside protection through put options at the 960 strike price, with expiry looming at the end of December 2025. The stock's price action, combined with reduced investor participation and relative sector underperformance, underscores a cautious stance among market participants. Investors should remain attentive to these dynamics as they assess risk and opportunity in the NBFC sector.
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