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

Put Option Activity Highlights

On 23 January 2026, Vedanta Ltd (stock code: 801588) emerged as the most active stock in put options, with the 680 strike price put contracts dominating trading volumes. A total of 5,095 contracts changed hands, generating a turnover of ₹1.63 crores (163.47 lakhs). Open interest at this strike stands at 2,257 contracts, indicating sustained interest from traders and investors in downside protection or speculative bearish bets.

The underlying stock price was ₹696.15 at the time, just shy of its intraday high of ₹699, which marked a fresh 52-week and all-time peak. This juxtaposition of rising put activity near a record high suggests a complex market sentiment, where participants are either hedging existing long positions or positioning for a potential pullback.

Price and Performance Context

Vedanta Ltd has been on a steady upward trajectory, recording gains for three consecutive sessions with a cumulative return of 3.72%. The stock outperformed its own recent averages, trading above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling a robust technical setup. However, on the day of the put option surge, Vedanta underperformed its sector, the Non-Ferrous Metals index, which gained 5.07%, while Vedanta’s own day return was 2.48%, lagging the sector by 2.18%.

Market cap remains substantial at ₹2,69,993 crores, categorising Vedanta as a large-cap stock with high liquidity. Delivery volumes on 22 January rose by 4.28% to 1.01 crore shares, reflecting increased investor participation. The stock also offers a healthy dividend yield of 3.39%, which adds to its appeal for income-focused investors despite the recent volatility.

Interpreting the Put Option Surge

The concentration of put option trades at the ₹680 strike price, which is slightly below the current market price, indicates a strategic level for hedging or bearish speculation. Traders may be anticipating a correction or increased volatility in the near term, especially with the expiry date approaching on 27 January 2026. The open interest of 2,257 contracts at this strike is significant, suggesting that many investors are either buying protection against a downside move or positioning for a decline.

Given Vedanta’s recent strong run and technical strength, the elevated put activity could also reflect profit-booking by institutional investors or a cautious stance amid broader market uncertainties. The stock’s underperformance relative to its sector on the day of the surge supports this view, as some investors may be locking in gains or mitigating risk.

Sector and Market Dynamics

The Non-Ferrous Metals sector has been buoyant, gaining 5.07% on the day, driven by positive commodity price trends and improving global demand outlook. Vedanta, as a key player in this space, benefits from these tailwinds but also faces sector-specific risks such as regulatory changes, commodity price fluctuations, and geopolitical tensions impacting supply chains.

Vedanta’s mojo score currently stands at 78.0 with a mojo grade of Buy, a slight downgrade from its previous Strong Buy rating on 13 January 2026. This adjustment reflects a more cautious outlook amid mixed signals from price action and option market activity. The market cap grade remains at 1, underscoring its status as a large-cap stock with strong institutional interest and liquidity.

Technical and Fundamental Outlook

Technically, Vedanta’s position above all major moving averages suggests a bullish medium to long-term trend. However, the surge in put options and the stock’s slight underperformance relative to its sector hint at near-term volatility. Investors should monitor the 680 strike price level closely, as a breach below this could trigger further downside pressure.

Fundamentally, Vedanta’s strong dividend yield of 3.39% and large market capitalisation provide a cushion against short-term fluctuations. The company’s diversified operations in non-ferrous metals and improving commodity prices support a positive medium-term outlook, but investors should remain vigilant to global macroeconomic developments and sector-specific risks.

Investor Implications and Strategy

For investors, the current scenario presents a nuanced picture. The strong technical backdrop and dividend yield make Vedanta an attractive buy for those with a medium to long-term horizon. However, the heightened put option activity and recent downgrade in mojo grade suggest caution in the short term.

Hedging strategies using put options at the ₹680 strike price could be prudent for existing shareholders to protect gains. Meanwhile, traders might consider the elevated open interest and turnover in puts as an opportunity to capitalise on potential volatility around the expiry date.

Market participants should also keep an eye on sector trends and global commodity prices, which remain key drivers for Vedanta’s performance. The stock’s liquidity, with an average traded value supporting trade sizes of up to ₹28.06 crores, ensures that investors can enter or exit positions with relative ease.

Conclusion

Vedanta Ltd’s recent surge in put option activity ahead of the 27 January expiry highlights a growing cautiousness among investors despite the stock’s recent highs. The interplay of strong fundamentals, technical strength, and increased bearish hedging creates a complex investment landscape. Careful monitoring of price levels, option market trends, and sector dynamics will be essential for investors aiming to navigate this environment effectively.

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