Steel Authority of India Sees Heavy Put Option Activity Amid Mixed Market Signals

Put Option Activity Highlights

On 31 Dec 2025, SAIL emerged as the most active stock in put options trading, with the 27 January 2026 expiry seeing a substantial volume of 2,456 contracts traded at the ₹140 strike price. The turnover for these put options reached ₹358.99 lakhs, while open interest stood at 1,576 contracts, indicating sustained interest and potential build-up of bearish bets or protective hedges.

The underlying stock price at the time was ₹144.15, just above the ₹140 strike, suggesting that traders are positioning for a possible downside move or seeking insurance against a correction from current levels.

Price and Technical Context

SAIL has been on a positive trajectory recently, hitting a new 52-week high of ₹147 on the day of the data release. The stock has recorded a consecutive four-day gain, delivering a robust 9.43% return over this period. It opened the trading session with a gap-up of 2.89%, touching an intraday high of ₹147, representing a 4.24% rise from the previous close.

Technically, SAIL is trading above all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a strong upward momentum. However, the stock underperformed its sector, which gained 2.81% on the same day, with SAIL’s sector-relative performance lagging by 0.57%. This divergence may be prompting cautious investors to hedge their positions.

Investor participation has also intensified, with delivery volumes on 30 Dec rising by 134.22% compared to the five-day average, reaching 1.53 crore shares. The stock’s liquidity remains healthy, supporting trade sizes up to ₹6.86 crore based on 2% of the five-day average traded value.

Fundamental and Market Positioning

Steel Authority Of India Ltd operates within the ferrous metals industry and is classified as a mid-cap stock with a market capitalisation of approximately ₹59,480 crore. The company’s Mojo Score stands at 65.0, reflecting a Hold rating, an upgrade from a previous Sell grade as of 23 December 2025. This improvement suggests a stabilising outlook, though not yet a definitive buy signal.

The market cap grade of 2 indicates moderate size and liquidity, consistent with the stock’s active trading profile. Despite the recent price appreciation, the cautious stance reflected in put option activity may be attributed to sector volatility and global commodity price fluctuations impacting steel producers.

Expiry Patterns and Investor Sentiment

The concentration of put option trades at the ₹140 strike price, just below the current market price, is indicative of a protective strategy by investors. This strike acts as a psychological support level, with traders possibly anticipating a pullback or seeking to limit downside risk ahead of the January expiry.

Open interest data corroborates this view, showing a meaningful accumulation of put contracts that could be exercised or offset depending on price movements in the coming weeks. Such activity often precedes periods of heightened volatility, as market participants adjust their exposures in response to evolving fundamentals and technical signals.

Sector and Broader Market Context

The ferrous metals sector, including steel, sponge iron, and pig iron, has gained 2.81% recently, buoyed by improving demand prospects and easing raw material costs. However, SAIL’s slight underperformance relative to the sector suggests company-specific factors or profit-taking may be influencing investor behaviour.

Meanwhile, the Sensex posted a modest 0.40% gain, underscoring a cautious but generally positive market environment. Against this backdrop, the surge in put option activity for SAIL stands out as a tactical move by investors to hedge or express bearish views selectively within a broadly constructive market.

Implications for Investors

For investors, the current scenario presents a nuanced picture. While SAIL’s recent price strength and technical positioning are encouraging, the elevated put option activity signals caution. This may reflect concerns over potential near-term corrections or sector-specific risks such as fluctuating steel prices, regulatory changes, or global trade dynamics.

Investors holding long positions might consider the put option surge as a prompt to review their risk management strategies, possibly incorporating protective puts or tightening stop-loss levels. Conversely, traders with a bearish outlook could view the active put strikes as an opportunity to capitalise on anticipated volatility or downside moves.

Given the Hold rating and the recent upgrade from Sell, the stock appears to be in a consolidation phase, with neither strong bullish nor bearish conviction dominating. Monitoring open interest trends and expiry dynamics in the coming weeks will be crucial to gauge the evolving market sentiment.

Conclusion

Steel Authority Of India Ltd’s put option market activity ahead of the 27 January 2026 expiry reveals a complex interplay of optimism and caution among investors. Despite the stock’s recent rally and technical strength, the surge in put contracts at the ₹140 strike price underscores a hedging mindset or bearish positioning. This duality reflects broader sector uncertainties and the need for prudent risk management as the stock navigates its current phase.

Investors should closely track price action, sector developments, and option market indicators to make informed decisions. The stock’s Hold rating and mid-cap status suggest it remains a watchlist candidate rather than a definitive buy or sell at this juncture.

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