9,107 Put Contracts on Union Bank of India at Rs 170 Strike Ahead of 28 July Expiry

Put Options Event and Cash Market Context

The put contracts expiring on 28 Jul 2026 at the Rs 170 strike saw a turnover of approximately ₹1,482.98 lakhs, signalling significant interest in this near-the-money option. Open interest at this strike stands at 1,705 contracts, indicating that a substantial portion of the traded volume represents fresh positioning rather than mere rollovers or adjustments.

The underlying stock, Union Bank of India, has been on a steady upward trajectory, gaining 12.09% over the past five sessions and outperforming its sector by 0.59% today. The stock closed at Rs 173.58, up 1.61% on the day, and has consistently traded above its 5-day, 20-day, 50-day, and 200-day moving averages, though it remains below the 100-day average. This price action provides important context for interpreting the put activity — is this put buying a hedge against a pullback or a directional bearish bet?

Strike Price Analysis: Moneyness and Intent

The Rs 170 strike price is approximately 2.1% out-of-the-money (OTM) relative to the current underlying price of Rs 173.58. This proximity to the money suggests that the puts are positioned close enough to offer meaningful protection but not so deep in-the-money (ITM) as to indicate outright bearish conviction. The near-the-money nature of these puts often aligns with hedging strategies, where investors seek to protect gains from recent rallies rather than speculate on sharp declines.

Had the puts been significantly ITM, it would have implied a stronger bearish stance or complex spread strategies. Conversely, far OTM puts would more likely indicate speculative bets or put writing. The Rs 170 strike sits in a zone that could also correspond to technical support levels, given the stock's position relative to its moving averages — does this strike align with a key support zone for Union Bank of India?

Interpreting the Put Activity: Hedging, Bearish Positioning, or Put Writing?

Put option activity can be ambiguous, especially when the underlying stock is rising. The three primary interpretations are:

• Protective Hedging: Buying OTM puts to guard against a potential pullback in a rising stock.
• Directional Bearish Positioning: Buying puts anticipating a decline in the stock price.
• Put Writing (Selling Puts): Collecting premium with the expectation that the stock will stay above the strike price, signalling bullish sentiment.

Given the stock's recent 12.09% gain over five sessions and its position above multiple short-term moving averages, the heavy put activity at Rs 170 is more consistent with protective hedging. Investors who have benefited from the rally may be seeking insurance against a near-term correction rather than betting on a sustained decline. The strike's proximity to the current price supports this view, as it offers a reasonable floor for protection without requiring a large premium outlay.

Put writing is less likely here, as the turnover and open interest suggest fresh buying rather than premium collection. The open interest of 1,705 contracts is modest relative to the 9,107 contracts traded, indicating that much of this activity is new rather than rollovers or unwinding of existing positions. Could this fresh positioning be signalling a cautious stance amid the rally?

Open Interest and Contracts Analysis

The ratio of contracts traded (9,107) to open interest (1,705) is approximately 5.3:1, which points to significant fresh activity rather than mere position adjustments. This suggests that investors are actively initiating new put positions at this strike, reinforcing the idea of recent hedging demand rather than closing or rolling existing positions.

Open interest levels are not excessively high, which reduces the likelihood of put writing strategies dominating this strike. Instead, the data points to a surge in put buying, likely as a protective measure. The turnover of nearly ₹1,483 lakhs further underscores the substantial premium paid to secure downside protection.

Cash Market Context: Moving Averages and Delivery Volumes

Union Bank of India is trading above its 5-day, 20-day, 50-day, and 200-day moving averages, which typically signals a bullish trend. However, it remains below the 100-day moving average, indicating some medium-term resistance. The Rs 170 put strike is positioned just below the current price and near the 50-day moving average, which often acts as a support level. This alignment suggests that the put buyers may be seeking to hedge against a pullback to this technical support rather than a deeper decline.

Delivery volumes on 14 Jul were 62.97 lakh shares, down 27.66% from the 5-day average, indicating reduced investor participation in the rally. This thinning delivery volume may be a factor prompting investors to buy puts as insurance, as rallies without strong delivery backing can be vulnerable to reversals — should investors be cautious about the sustainability of the recent gains?

Fundamental and Sector Overview

Union Bank of India is a large-cap public sector bank with a market capitalisation of approximately ₹1,31,374 crores. The stock offers a high dividend yield of 5.69% at the current price, which may attract income-focused investors. Its liquidity profile supports sizeable trades, with a 5-day average traded value sufficient for Rs 6.81 crore trade sizes. These fundamentals provide a stable backdrop for the recent price gains and the observed options activity.

Conclusion: Protective Hedging Dominates Put Activity

The heavy put option activity at the Rs 170 strike for the 28 July expiry on Union Bank of India is best interpreted as protective hedging amid a strong recent rally. The strike price’s proximity to the current price, combined with the stock’s position above key short-term moving averages and the reduced delivery volume, supports the view that investors are seeking downside insurance rather than expressing outright bearish conviction.

While directional bearish positioning cannot be entirely ruled out, the data does not strongly support it given the stock’s upward momentum. Put writing appears unlikely given the fresh positioning indicated by the turnover and open interest ratio. Should investors consider similar hedging strategies or interpret this as a signal of caution in the rally?

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