Vedanta Ltd Sees Heavy Put Option Activity Amid Bearish Sentiment

Overview of Put Option Activity

Data from the latest trading session reveals that Vedanta Ltd’s put options have been the most actively traded among non-ferrous metal stocks, with a total turnover exceeding ₹4,700 lakhs across key strike prices. The underlying stock closed at ₹660.25, yet the most heavily traded put strikes were notably below and around this level, indicating a defensive stance by market participants.

Specifically, the 620 strike put option led the volume charts with 5,457 contracts traded, generating a turnover of ₹1,752.13 lakhs and an open interest of 1,404 contracts. Close behind were the 550 strike puts with 5,493 contracts traded and an open interest of 1,398, and the 640 strike puts with 4,170 contracts traded and 798 open interest. The 630 strike saw 3,967 contracts traded, while the 500 strike, though further out-of-the-money, still attracted 3,518 contracts.

This concentration of activity in puts with strike prices ranging from ₹500 to ₹640, all expiring on 24 February 2026, highlights a broad spectrum of bearish hedging and speculative positioning. The open interest figures suggest that many traders are maintaining these positions rather than closing them out, signalling sustained downside expectations or risk mitigation strategies.

Price Action and Market Context

Vedanta Ltd’s stock price has been under pressure recently, falling by 3.22% on the day of the data release and registering a consecutive two-day decline totalling a 13.49% loss. The stock opened sharply lower by 6.83% and touched an intraday low of ₹613.40, representing a 10% drop from the previous close. Notably, the weighted average traded price skewed closer to the day’s low, indicating selling pressure throughout the session.

Despite this, Vedanta has outperformed its sector, which declined by 8.94% on the same day, and the broader Sensex, which was marginally up by 0.19%. The stock remains above its 20-day, 50-day, 100-day, and 200-day moving averages, though it trades below the 5-day average, suggesting short-term weakness amid longer-term support levels.

Investor participation has increased markedly, with delivery volumes rising by 115.5% compared to the five-day average, reaching 2.16 crore shares on 30 January. This heightened activity underscores the stock’s liquidity and the market’s focus on Vedanta amid broader sector volatility.

Implications of Put Option Concentration

The heavy put option volumes at strike prices below the current market price suggest that investors are either hedging existing long positions or speculating on a potential decline in Vedanta’s share price. The 620 and 550 strike puts, in particular, indicate a significant level of downside protection being sought, as these strikes are comfortably below the prevailing price of ₹660.25.

Open interest data corroborates this view, with over 1,400 contracts outstanding at the 620 strike and nearly 1,400 at the 550 strike. This persistent open interest points to a sustained bearish sentiment or risk management strategy rather than short-term speculative trades.

Given Vedanta’s recent downgrade from a Hold to a Buy rating by MarketsMOJO on 13 January 2026, with a Mojo Score of 75.0, the put option activity may also reflect market participants’ caution in light of mixed signals. While the stock is rated as a Buy with a strong market cap grade of 1, the recent price weakness and sector headwinds have prompted investors to seek downside protection.

Sector and Market Dynamics

The non-ferrous metals sector has been under pressure, with the Metal - Non Ferrous index falling by 8.94% on the day. Vedanta’s relative outperformance by 6.33% against this backdrop is notable but insufficient to dispel concerns about near-term volatility. The sector’s sensitivity to global commodity prices, currency fluctuations, and geopolitical risks continues to weigh on investor sentiment.

Vedanta’s dividend yield of 3.37% at the current price offers some income cushion, but the stock’s recent price action and option market behaviour suggest that investors remain wary of further downside risks. The stock’s liquidity, with a tradable size of approximately ₹46.92 crore based on recent volumes, supports active trading and hedging strategies.

Outlook and Investor Considerations

Investors analysing Vedanta Ltd should weigh the recent surge in put option activity as a signal of increased caution within the market. While the stock retains a Buy rating and a solid fundamental profile, the technical indicators and option market positioning suggest that downside risks remain elevated in the near term.

Traders may consider the put option strikes around ₹620 and ₹550 as key levels of interest, both for potential support and as indicators of market sentiment. The expiry date of 24 February 2026 will be critical in determining whether the bearish positioning translates into actual price declines or if the stock stabilises and recovers.

Given the stock’s liquidity and active options market, investors have ample opportunity to implement hedging strategies or speculative plays aligned with their risk tolerance and market outlook. Monitoring open interest changes and volume trends in the coming weeks will provide further clarity on the evolving sentiment.

Overall, Vedanta Ltd’s current market dynamics reflect a complex interplay of fundamental strength, sector headwinds, and cautious investor positioning, making it a stock to watch closely in the non-ferrous metals space.

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