Vedanta Ltd Sees Surge in Put Option Activity Amid Mixed Market Signals

Robust Put Option Volumes Highlight Investor Caution

On 21 January 2026, Vedanta Ltd (stock code: 801588) emerged as the most active stock in put options trading, with 7,467 contracts exchanged at the 670 strike price for the expiry date of 27 January 2026. The turnover for these put options reached ₹581.34 lakhs, underscoring significant investor interest in downside protection or speculative bearish bets. Open interest stood at 1,652 contracts, indicating sustained positions rather than fleeting trades.

The underlying stock price was ₹676.10 at the time, just above the 670 strike, suggesting that traders are positioning for a potential pullback or volatility in the near term. This activity is particularly noteworthy given Vedanta’s recent price momentum, having touched a new 52-week and all-time high of ₹694 on the same day.

Price Performance and Technical Strength

Vedanta’s price action has been resilient, outperforming its sector by 4.78% on the day and registering a 0.96% gain over the past two consecutive trading sessions. The stock is trading comfortably above all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a strong uptrend. This technical strength contrasts with the broader Non-Ferrous Metals sector, which declined by 4.89% on the day, reflecting sector-specific pressures.

Despite the recent gains, investor participation appears to be waning, with delivery volumes falling by 23.79% to 75.77 lakh shares on 21 January compared to the five-day average. This decline in delivery volume may indicate cautious accumulation or profit-taking by market participants.

Market Cap and Mojo Ratings Reflect Confidence Despite Put Activity

Vedanta Ltd is classified as a large-cap stock with a market capitalisation of ₹2,69,289 crore. The company holds a Mojo Score of 78.0 and a Mojo Grade of Buy, recently downgraded from Strong Buy on 13 January 2026. This slight moderation in rating suggests a cautious stance by analysts, possibly influenced by the recent uptick in put option activity and sector volatility.

The stock’s dividend yield stands at a healthy 3.4%, adding an income component to its appeal for long-term investors. Liquidity remains robust, with the stock capable of supporting trade sizes up to ₹35.54 crore based on 2% of its five-day average traded value, ensuring ease of entry and exit for institutional and retail participants alike.

Put Option Activity as a Hedge and Bearish Indicator

The concentration of put option trades at the 670 strike price, just below the current market price, indicates that investors are either hedging existing long positions or speculating on a near-term correction. The expiry date of 27 January 2026 is imminent, which often leads to heightened options activity as traders adjust their positions ahead of expiry.

Given Vedanta’s recent rally and technical strength, the surge in put buying may reflect prudent risk management rather than outright bearish sentiment. However, the broader sector weakness and falling delivery volumes suggest that some investors are bracing for potential volatility or profit-taking in the short term.

Sector Context and Broader Market Dynamics

The Non-Ferrous Metals sector has been under pressure, with a 4.89% decline on the day contrasting Vedanta’s outperformance. This divergence highlights Vedanta’s relative strength but also underscores the risks inherent in the sector, including commodity price fluctuations, regulatory changes, and global demand uncertainties.

Meanwhile, the Sensex gained 0.54% on the day, reflecting a mixed market environment where select large caps like Vedanta buck the sector trend. Investors should weigh these factors carefully when considering exposure to Vedanta, balancing its strong fundamentals and technicals against the cautious positioning evident in options markets.

Investor Takeaways and Outlook

Vedanta Ltd’s recent surge in put option activity is a clear signal that market participants are hedging against potential downside risks despite the stock’s strong technical backdrop. The 670 strike price for the 27 January expiry is a critical level to watch, as a breach could trigger further bearish momentum.

Investors should monitor open interest trends and delivery volumes closely in the coming days to gauge whether the put buying is primarily protective or speculative. The company’s solid fundamentals, large-cap status, and attractive dividend yield provide a cushion, but sector headwinds and global commodity uncertainties remain key risks.

For those with existing exposure, maintaining disciplined stop-loss levels and considering hedging strategies may be prudent. New entrants should weigh the current premium in put options as a cost of insurance against short-term volatility while keeping an eye on broader market cues.

Conclusion

Vedanta Ltd stands at a crossroads where strong price momentum meets cautious investor positioning. The heavy put option volumes at the 670 strike price ahead of the imminent expiry reflect a market balancing act between optimism and risk management. As the Non-Ferrous Metals sector navigates its challenges, Vedanta’s performance and options activity will remain a key barometer for investor sentiment in this space.

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