Vedanta Ltd Sees Heavy Put Option Activity Amid Mixed Market Signals

Robust Stock Performance Contrasts with Rising Put Option Interest

Vedanta Ltd. (NSE: VEDL) has been on a steady upward trajectory, hitting an intraday high of ₹659.95 on 14 January 2026, marking a new 52-week and all-time peak. The stock has outperformed its sector by 0.63% on the day and has gained 9.04% over the past four consecutive trading sessions. It currently trades comfortably above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, reflecting strong technical momentum.

Despite this bullish price action, the options market reveals a contrasting narrative. Put options, typically used to hedge against downside risk or express bearish views, have seen heavy volumes and open interest, particularly at strike prices just below the current underlying value of ₹655.80.

Detailed Analysis of Put Option Activity

The most active put options for Vedanta Ltd. are clustered around the ₹630, ₹640, and ₹650 strike prices, all expiring on 27 January 2026. The data shows:

• ₹630 strike put options traded 1,994 contracts with a turnover of ₹171.75 lakhs and open interest of 1,325 contracts.


• ₹640 strike put options saw 2,149 contracts traded, generating ₹259.00 lakhs in turnover and holding an open interest of 1,611 contracts.


• ₹650 strike put options led the activity with 2,358 contracts traded, turnover of ₹395.09 lakhs, and open interest of 1,170 contracts.

This concentration of put option activity below the current market price suggests that investors are positioning for potential downside or seeking protection against a correction in the near term. The open interest figures indicate that these positions are not merely speculative trades but represent significant hedging or bearish bets.

Market Context and Sectoral Performance

Vedanta’s sector, Non-Ferrous Metals, has gained 2.85% on the day, reflecting broader strength in metal prices and industrial demand. The stock’s delivery volume on 13 January 2026 surged to 88.21 lakh shares, a 42.08% increase over the five-day average, signalling rising investor participation and confidence in the underlying fundamentals.

However, the presence of heavy put option activity indicates that some market participants remain cautious, possibly anticipating volatility or a pullback after the recent rally. The stock’s dividend yield of 3.61% at current prices adds an income cushion, but the mixed signals from the options market warrant close monitoring.

Mojo Score and Rating Update

Vedanta Ltd. currently holds a Mojo Score of 78.0, categorised as a Buy rating. This represents a slight downgrade from its previous Strong Buy grade, which was revised on 13 January 2026. The downgrade reflects a cautious stance amid the recent price surge and increased volatility signals from the options market. The company’s market capitalisation stands at a substantial ₹2,56,814.74 crore, placing it firmly in the Large Cap category with a Market Cap Grade of 1, indicating strong market presence and liquidity.

Expiry Patterns and Implications for Investors

The expiry date of 27 January 2026 is critical as it marks the settlement of these active put options. The clustering of open interest near the ₹640 and ₹650 strikes suggests that these levels will be closely watched by traders and investors alike. A breach below these strikes could trigger further downside pressure, while a sustained hold above them may alleviate bearish concerns.

Investors should also note the turnover figures, which highlight significant capital flow into these put contracts, amounting to over ₹825 lakhs combined across the three strike prices. This level of activity is indicative of heightened hedging demand or speculative bearish positioning, which could translate into increased volatility as expiry approaches.

Balancing Bullish Momentum with Hedging Strategies

While Vedanta’s recent price action and sectoral gains paint a bullish picture, the options market activity underscores the importance of risk management. The elevated put option volumes and open interest serve as a reminder that market participants are actively seeking protection against potential downside risks, possibly due to macroeconomic uncertainties or commodity price fluctuations impacting the Non-Ferrous Metals industry.

For investors, this environment calls for a balanced approach—recognising the stock’s strong fundamentals and technical strength while remaining vigilant to signals of increased volatility and downside risk as reflected in the options market.

Outlook and Investor Takeaways

Vedanta Ltd. remains a key stock to watch within the Non-Ferrous Metals sector, given its large market capitalisation, steady dividend yield, and recent price momentum. The stock’s ability to maintain levels above its key moving averages and the new highs achieved this week reflect underlying strength.

However, the pronounced put option activity ahead of the 27 January expiry signals that investors are hedging against potential near-term corrections or volatility. This duality suggests that while the medium to long-term outlook remains constructive, short-term caution is warranted.

Market participants should monitor the stock’s price action relative to the ₹630-₹650 range, as a decisive move below these strikes could trigger further downside, while a firm hold or breakout above recent highs may restore bullish confidence.

Given the mixed signals, a prudent strategy might involve using options for hedging existing positions or selectively adding exposure with defined risk parameters.

Sector and Market Comparison

Compared to the broader Sensex, which was largely flat with a marginal decline of 0.02% on the day, Vedanta’s 3.07% gain and the sector’s 2.85% rise highlight relative outperformance. This divergence underscores the stock’s resilience amid broader market uncertainty, yet the options market activity suggests that some investors are bracing for potential volatility.

Liquidity remains robust, with the stock’s average traded value supporting trade sizes of up to ₹18.62 crore based on 2% of the five-day average, ensuring that investors can enter or exit positions without significant market impact.

Conclusion

Vedanta Ltd.’s recent price strength and sectoral tailwinds are tempered by a surge in put option volumes and open interest at strikes below the current market price. This pattern reflects a cautious stance among investors, balancing optimism with prudent risk management ahead of the January expiry.

For investors, the key will be to monitor price action around the ₹630-₹650 levels and remain alert to shifts in options market positioning, which often presage changes in underlying sentiment. The stock’s strong fundamentals and large-cap status provide a solid foundation, but the elevated hedging activity signals that volatility may be on the horizon.

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