Vodafone Idea Sees Heavy Put Option Activity Amid Bearish Sentiment

Intense Put Option Trading Highlights Bearish Outlook

On 9 January 2026, Vodafone Idea Ltd., a mid-cap telecom services company with a market capitalisation of approximately ₹1,24,594 crores, emerged as the most active stock in put options trading. The underlying stock closed at ₹11.88, outperforming its sector by 2.8% and the Sensex by 3.41% on the day, yet the options market tells a different story. Investors have been actively purchasing put options as a form of downside protection or speculative bearish bets.

The most traded put options are clustered around the ₹10, ₹11, and ₹12 strike prices, all expiring on 27 January 2026. The number of contracts traded at these strikes were 2,603, 3,379, and 2,727 respectively, with open interest levels of 4,658, 4,723, and 4,874 contracts. The turnover for these strikes was substantial, with the ₹12 strike alone accounting for nearly ₹994.05 lakhs, dwarfing the ₹93.02 lakhs and ₹410.57 lakhs recorded at ₹10 and ₹11 strikes respectively.

Expiry Patterns and Investor Positioning

The concentration of put option activity at strikes near the current stock price suggests investors are positioning for potential downside risk in the near term. The January expiry is a critical date, and the elevated open interest indicates that many traders are either hedging existing long positions or speculating on a decline below these strike levels. The ₹12 strike, slightly above the current market price, has attracted the highest turnover and open interest, signalling a cautious stance despite the stock’s recent upward momentum.

Vodafone Idea’s stock has gained 3.58% over the last two consecutive trading days and is trading above all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – which typically indicates bullish technical momentum. However, the falling delivery volume, down 42.8% against the 5-day average, suggests waning investor participation, which may be contributing to the increased demand for downside protection through puts.

Mojo Score and Market Sentiment

Vodafone Idea currently holds a Mojo Score of 46.0, categorised as a Sell, though this represents an improvement from its previous Strong Sell grade as of 17 October 2025. The market cap grade is low at 2, reflecting its mid-cap status and the challenges the company faces in a highly competitive telecom sector. The stock’s 1-day return of 3.22% outpaces the sector’s 0.59% and the Sensex’s marginal decline of 0.19%, yet the options market’s bearish undertone suggests investors remain cautious about sustained gains.

Given the telecom sector’s volatility and Vodafone Idea’s ongoing restructuring efforts, the surge in put options may also reflect hedging strategies by institutional investors seeking to mitigate risk amid uncertain regulatory and competitive pressures.

Liquidity and Trading Dynamics

Liquidity remains adequate for Vodafone Idea, with the stock’s traded value supporting trade sizes up to ₹22.56 crores based on 2% of the 5-day average traded value. This liquidity facilitates active options trading and allows investors to implement complex strategies involving puts and calls. The delivery volume of 14.12 crores on 8 January, despite its recent decline, still indicates significant market interest in the stock.

Implications for Investors

For investors, the heavy put option activity at strikes close to the current price signals a cautious outlook. Those holding long positions in Vodafone Idea may consider protective puts to hedge against potential downside risks, especially with the January expiry approaching. Conversely, speculative traders might view the elevated open interest and turnover as an opportunity to capitalise on expected volatility.

It is also important to monitor the stock’s price action relative to key moving averages and delivery volumes, as these technical indicators will provide further clues on the sustainability of the recent gains. The divergence between the underlying stock’s modest rally and the options market’s bearish positioning highlights the complexity of investor sentiment in Vodafone Idea at this juncture.

Outlook and Strategic Considerations

Vodafone Idea’s recent upgrade from Strong Sell to Sell by MarketsMOJO reflects some stabilisation in fundamentals, yet the company remains under pressure from intense competition and regulatory challenges. The telecom sector’s evolving landscape, including spectrum costs and subscriber churn, continues to weigh on investor confidence.

Investors should closely monitor the upcoming earnings releases and regulatory announcements, as these will likely influence both the stock price and options market activity. The current put option volumes and open interest suggest that market participants are bracing for potential volatility, making risk management strategies essential for portfolio protection.

In summary, while Vodafone Idea’s stock shows signs of technical strength, the options market reveals a more guarded sentiment. The heavy put option trading at strikes near the current price and the approaching January expiry underscore the importance of cautious positioning and vigilant monitoring of market developments.

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