Vedanta Sees Heavy Put Option Activity Amidst Bullish Price Momentum

Put Option Activity Highlights

On 22 December 2025, Vedanta Ltd. (stock code: 801588) recorded the most active put options with 2,943 contracts traded at the 570 strike price, generating a turnover of approximately ₹60.92 lakhs. The open interest for these put options stands at 3,592 contracts, indicating sustained interest in downside protection or speculative bearish positioning as the expiry date approaches.

The underlying stock price was ₹591.45 at the time of this activity, with the stock having touched an all-time high of ₹591.95 earlier in the day. This juxtaposition of a near-record price and heavy put option volume points to a nuanced market sentiment where investors may be seeking to hedge existing long positions or speculate on a potential price correction.

Price and Market Performance Context

Vedanta’s recent price trajectory has been notably positive, with the stock gaining for ten consecutive trading sessions and delivering a cumulative return of 15.26% over this period. The stock is trading above its key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a strong upward momentum from a technical perspective.

However, on the day of the put option surge, Vedanta underperformed its sector, the Non-Ferrous Metals index, by 1.06%. The sector itself posted a gain of 2.42%, while the Sensex rose by 0.60%. This relative underperformance, despite the stock’s strong longer-term trend, may be contributing to the increased put option interest as investors weigh the possibility of short-term volatility.

Investor Participation and Liquidity

Investor participation, as measured by delivery volume, showed a decline with 95.13 lakh shares delivered on 19 December 2025, down 5.21% compared to the five-day average. This reduction in delivery volume could reflect a cautious stance among shareholders amid the recent price rally and option market activity.

Liquidity remains robust, with the stock’s average traded value supporting trade sizes up to ₹26.03 crore based on 2% of the five-day average traded value. This liquidity facilitates active trading in both the cash and derivatives segments, enabling investors to implement complex strategies such as hedging with put options.

Implications of Put Option Concentration at 570 Strike

The concentration of put option contracts at the 570 strike price, which is approximately 3.6% below the current underlying price, suggests that market participants are positioning for a potential downside buffer around this level. This strike price acts as a psychological support zone where investors may seek protection against a pullback.

Given the expiry date of 30 December 2025, the timing aligns with the end-of-year portfolio adjustments and risk management activities. Traders and institutional investors often use put options to hedge against adverse price movements during periods of heightened uncertainty or to capitalise on expected volatility.

Sector and Market Capitalisation Overview

Vedanta operates within the Non-Ferrous Metals industry, a sector that has shown resilience with a 2.42% gain on the day of the reported option activity. The company’s market capitalisation stands at ₹2,30,967.07 crore, categorising it as a large-cap stock with significant influence on sectoral indices and investor sentiment.

The stock’s dividend yield of 5.41% at the current price level adds an income component to its investment appeal, potentially attracting long-term investors despite short-term option market fluctuations.

Balancing Bullish Momentum with Bearish Hedging

The coexistence of a strong price rally and heavy put option trading reflects a balanced market assessment. While the stock’s technical indicators and recent gains point to bullish momentum, the elevated put option interest indicates that investors are mindful of potential risks and are employing protective measures.

This duality is common in large-cap stocks where institutional investors manage sizeable portfolios and seek to mitigate downside risks without liquidating positions. The put options at the 570 strike price provide a cost-effective way to limit losses while maintaining exposure to further upside.

Outlook and Investor Considerations

Investors analysing Vedanta’s current market dynamics should consider the interplay between the stock’s strong technical positioning and the protective put option activity. The stock’s ability to sustain above key moving averages and its recent 52-week high indicate underlying strength, while the put option interest signals caution and prudent risk management.

Market participants may want to monitor the open interest trends and volume in the options market as the 30 December expiry approaches, as shifts could provide early indications of changing sentiment or volatility expectations.

Additionally, the broader sector performance and macroeconomic factors influencing commodity prices and metal demand will remain critical drivers for Vedanta’s price action in the near term.

Summary

Vedanta Ltd. is currently exhibiting a complex market profile characterised by robust price gains alongside significant put option activity at the 570 strike price for the 30 December 2025 expiry. This pattern suggests a blend of bullish momentum tempered by cautious hedging or speculative bearish bets. The stock’s large-cap status, dividend yield, and sectoral context further enrich the investment narrative, making it a focal point for traders and investors navigating the Non-Ferrous Metals space.

As the expiry date nears, the evolving options market data will provide valuable insights into investor expectations and risk appetite, helping market participants make informed decisions.

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