Robust Call Option Activity Highlights Bullish Sentiment
On 26 February 2026, Cholamandalam Investment witnessed an impressive volume of 4,724 call option contracts traded for the 30 March 2026 expiry at the ₹1,800 strike price. This activity generated a turnover of approximately ₹75.38 crores, underscoring strong market interest in leveraged bullish bets on the stock. The open interest currently stands at 683 contracts, indicating sustained positions held by traders anticipating upward price movement.
The underlying stock closed at ₹1,702.40, trading below the ₹1,800 strike, yet the heavy call option volume suggests investors are positioning for a rally exceeding this level within the next month. This is particularly notable given the stock’s recent underperformance relative to its sector and benchmark indices.
Price Action and Volatility Context
Cholamandalam’s share price declined by 2.90% on the day, underperforming the NBFC sector which gained 0.11%, and the Sensex which rose 0.21%. The stock touched an intraday low of ₹1,628, marking a sharp 7.21% drop from recent highs. This volatility is reflected in an intraday price fluctuation of 5.49%, calculated from the weighted average price, signalling heightened uncertainty among investors.
Technical indicators reveal a mixed picture. The stock remains above its 200-day moving average, a long-term bullish signal, but trades below its 5-day, 20-day, 50-day, and 100-day moving averages, indicating short- to medium-term weakness. Additionally, delivery volumes have fallen by 22.58% compared to the five-day average, suggesting reduced investor participation in the cash market despite the options activity.
Market Capitalisation and Quality Assessment
Cholamandalam Investment & Finance Company Ltd is a large-cap entity with a market capitalisation of ₹1,51,020 crores, operating within the Non-Banking Financial Company (NBFC) sector. The company’s MarketsMOJO score stands at 71.0, reflecting a positive outlook, and it has recently been upgraded from a Hold to a Buy rating as of 13 January 2026. This upgrade is supported by improved fundamentals and favourable sector dynamics.
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Expiry Patterns and Strike Price Significance
The 30 March 2026 expiry has attracted the bulk of call option interest, with the ₹1,800 strike price emerging as the focal point for bullish bets. This strike is approximately 5.6% above the current underlying price, indicating that traders expect the stock to recover and surpass this level within the next month. The concentration of open interest at this strike price also suggests a potential short squeeze or a breakout scenario if the stock gains momentum.
Options traders often use call options to leverage upside potential while limiting downside risk to the premium paid. The high turnover and open interest at this strike price reflect a strategic positioning by market participants who anticipate a positive catalyst or improved earnings outlook for Cholamandalam Investment in the near term.
Sector and Peer Comparison
Within the NBFC sector, Cholamandalam Investment’s recent underperformance contrasts with the broader sector’s modest gains. However, its upgraded MarketsMOJO grade from Hold to Buy signals improving fundamentals relative to peers. The company’s strong market capitalisation and liquidity support active trading and investor confidence, despite short-term volatility.
Compared to other NBFCs, Cholamandalam’s call option activity is among the highest, highlighting its prominence as a preferred stock for bullish derivatives strategies. This may be driven by expectations of favourable credit growth, asset quality improvement, or regulatory tailwinds benefiting the NBFC space.
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Investor Implications and Outlook
For investors, the heavy call option activity at the ₹1,800 strike price ahead of the March expiry suggests a cautiously optimistic outlook on Cholamandalam Investment’s near-term prospects. While the stock has experienced recent volatility and a short-term downtrend, the underlying fundamentals and upgraded rating support a potential recovery.
Traders should monitor price action closely, especially the ability of the stock to hold above key moving averages and the evolution of open interest in options. A sustained move above ₹1,750 could trigger further bullish momentum, validating the call option positioning. Conversely, continued weakness and declining delivery volumes may temper enthusiasm and warrant a more cautious stance.
Given the stock’s liquidity and large-cap status, it remains a viable candidate for both long-term investors and tactical traders seeking exposure to the NBFC sector’s growth potential.
Summary
Cholamandalam Investment & Finance Company Ltd’s recent surge in call option trading, particularly at the ₹1,800 strike price for the 30 March 2026 expiry, highlights a significant bullish sentiment despite short-term price weakness. The stock’s upgraded MarketsMOJO Buy rating, large market capitalisation, and active derivatives market participation position it as a key focus for investors navigating the NBFC sector’s evolving landscape. While volatility remains elevated, the options market activity suggests confidence in a potential price rebound in the coming weeks.
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