Eternal Ltd Sees Surge in Call Option Activity Ahead of January Expiry

Robust Call Option Volumes Highlight Investor Interest

The stock, currently trading at ₹285.60, has attracted substantial call option activity across multiple strike prices, with the most active contracts clustered between ₹290 and ₹310. The highest volume was recorded at the ₹300 strike, where 22,643 contracts changed hands, generating a turnover of approximately ₹2,135.97 lakhs. This was closely followed by the ₹290 strike with 14,559 contracts and a turnover of ₹2,566.72 lakhs, and the ₹310 strike with 11,034 contracts traded, amounting to ₹575.29 lakhs in turnover.

Open interest data further corroborates this bullish sentiment, with the ₹300 strike boasting the highest open interest of 8,074 contracts, indicating strong investor commitment at this level. The ₹310 and ₹290 strikes also show significant open interest of 5,165 and 6,180 contracts respectively, suggesting that market participants are positioning for a potential upward move in the near term.

Expiry Patterns and Strike Price Concentration

All the active call options are set to expire on 27 January 2026, underscoring a concentrated focus on short-term price movements. The clustering of activity around the ₹290 to ₹310 strikes, which bracket the current underlying price, reflects a strategic bet on the stock breaking above its recent intraday high of ₹305, touched during a 7.58% rally earlier in the day.

This expiry date is critical as it coincides with the stock’s recent momentum, having gained 6.29% over the last two days and opened with a gap up of 5.82% on the day of analysis. The weighted average price of traded volumes skewing closer to the low price suggests some cautious optimism, with investors possibly seeking to capitalise on dips within the rally.

Stock Performance and Technical Context

Eternal Ltd’s recent performance aligns with sector trends, delivering a 1.39% gain on the day compared to the E-Retail sector’s 1.21% and the Sensex’s 0.96%. The stock’s market capitalisation stands at a substantial ₹2,73,491 crores, categorising it as a large-cap entity with significant liquidity. Despite this, investor participation has shown signs of moderation, with delivery volumes falling by 28.34% against the five-day average, indicating some profit-booking or cautious positioning ahead of the expiry.

Technically, the stock trades above its 5-day, 20-day, and 200-day moving averages but remains below the 50-day and 100-day averages, suggesting a mixed momentum profile. This technical setup may explain the concentrated call option activity as traders anticipate a breakout beyond resistance levels in the short term.

Mojo Score and Rating Update

Despite the bullish options activity, Eternal Ltd’s Mojo Score currently stands at 43.0, reflecting a Sell rating, downgraded from Hold on 23 October 2025. The downgrade was influenced by a low Market Cap Grade of 1, signalling concerns over valuation or growth prospects relative to peers. This divergence between the options market’s bullish positioning and the fundamental rating suggests that traders may be speculating on short-term price gains rather than long-term value appreciation.

Investor Sentiment and Market Implications

The heavy call option volumes at strike prices above the current market price indicate a strong bullish sentiment among derivatives traders. The open interest build-up at ₹300 and ₹310 strikes implies expectations of the stock surpassing these levels by expiry. However, the falling delivery volumes and mixed moving average signals counsel caution, as the rally may be vulnerable to profit-taking or volatility in the coming sessions.

For investors, this scenario presents a nuanced picture: while short-term momentum and options market activity suggest upside potential, the fundamental downgrade and technical resistance levels warrant a measured approach. Monitoring the stock’s price action as expiry approaches will be crucial to gauge whether the bullish bets materialise or if a correction ensues.

Outlook Ahead of Expiry

As the 27 January expiry approaches, market participants will closely watch Eternal Ltd’s price movements and option open interest changes. Should the stock breach the ₹300 to ₹310 range decisively, it could trigger further call option buying and potentially fuel a short squeeze, given the sizeable open interest at these strikes.

Conversely, failure to sustain gains above these levels may lead to a rapid unwinding of bullish positions, resulting in increased volatility. Investors should also consider broader sector trends and macroeconomic factors impacting the E-Retail and E-Commerce space, which could influence Eternal Ltd’s trajectory.

Summary

Eternal Ltd’s recent surge in call option activity highlights a strong speculative interest in the stock’s near-term upside potential. The concentration of trades and open interest at strikes above the current price, combined with recent price gains, points to a bullish outlook among derivatives traders. However, the fundamental downgrade and mixed technical signals suggest that investors should exercise caution and closely monitor developments as expiry nears.

For those seeking exposure to the E-Retail sector, Eternal Ltd remains a stock to watch, but alternative opportunities may offer better risk-reward profiles given the current rating and market dynamics.

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