HCL Technologies Sees Heavy Call Option Activity Amid Market Volatility

Call Option Activity Highlights

On 4 February 2026, HCL Technologies witnessed a remarkable surge in call option contracts, with 4,424 contracts traded at the 1700 strike price for the expiry date of 24 February 2026. This activity generated a turnover of approximately ₹150.5 lakhs, reflecting robust investor engagement in derivative markets. The open interest at this strike stands at 2,602 contracts, indicating sustained interest and potential build-up of bullish positioning ahead of the expiry.

The underlying stock closed at ₹1,618.30, trading below the 1700 strike price, which is currently out-of-the-money. However, the concentration of call buying at this level suggests that market participants are positioning for a price recovery above this threshold within the next three weeks.

Price and Trend Analysis

HCL Technologies’ share price has experienced a notable correction, falling by 4.62% on the day, in line with the broader IT sector’s decline of 4.96%. The stock opened with a gap down of 3.14% and touched an intraday low of ₹1,586, marking a 6.45% drop from the previous close. This retracement follows two consecutive days of gains, signalling a short-term trend reversal.

Technical indicators reveal a mixed picture. The stock price remains above its 100-day and 200-day moving averages, which often act as long-term support levels. However, it is trading below the 5-day, 20-day, and 50-day moving averages, reflecting near-term weakness and increased selling pressure. The weighted average price of traded options clustered near the day’s low further underscores bearish sentiment among spot traders, even as call option buyers anticipate a rebound.

Sector and Market Context

The IT - Software sector has been under pressure recently, with the Sensex marginally up by 0.16% on the day, contrasting the sector’s 4.92% decline. HCL Technologies, a large-cap heavyweight with a market capitalisation of ₹4,58,677 crores, is navigating this challenging environment with a dividend yield of 3.19%, which remains attractive for income-focused investors.

Investor participation has risen notably, with delivery volumes reaching 20.4 lakh shares on 3 February, an 11.5% increase over the five-day average. This heightened activity suggests that despite the recent price dip, institutional and retail investors are accumulating shares, possibly anticipating a recovery driven by upcoming earnings or sectoral tailwinds.

Mojo Score and Rating Update

HCL Technologies currently holds a Mojo Score of 72.0, reflecting a solid Buy rating. This marks a slight downgrade from its previous Strong Buy grade, which was revised on 1 February 2026. The downgrade reflects recent price volatility and sector headwinds but maintains confidence in the company’s fundamentals and growth prospects. The Market Cap Grade remains at 1, underscoring its status as a large-cap leader in the software and consulting industry.

Expiry Patterns and Investor Positioning

The expiry date of 24 February 2026 is attracting significant open interest, particularly at the 1700 strike price. This suggests that traders are positioning for a potential upside move within the next three weeks. The high volume of call contracts traded indicates a bullish sentiment, possibly driven by expectations of positive quarterly results or favourable sector developments.

Given the current underlying price of ₹1,618.30, the 1700 strike represents a 5.1% premium, which is a reasonable target for investors anticipating a rebound. The liquidity of the stock, with a 5-day average traded value supporting trade sizes up to ₹9.64 crores, facilitates active options trading and efficient price discovery.

Risks and Considerations

While call option activity signals optimism, investors should be mindful of the recent downward momentum and sector-wide weakness. The IT sector’s decline of nearly 5% on the day highlights broader market pressures, including global macroeconomic uncertainties and potential margin pressures. The stock’s failure to hold above short-term moving averages may indicate further near-term volatility.

Moreover, the open gap down and intraday lows suggest that bears remain active, and a sustained recovery will require positive catalysts such as strong earnings, order wins, or favourable policy developments. Investors should monitor upcoming corporate announcements and sector trends closely before committing to bullish positions.

Outlook and Investor Takeaways

HCL Technologies remains a key player in the Computers - Software & Consulting sector, with a large market capitalisation and a strong dividend yield of 3.19%. The recent surge in call option activity at the 1700 strike price expiry on 24 February 2026 reflects a cautiously optimistic market stance, despite the recent price correction.

Investors should weigh the technical signals of short-term weakness against the company’s robust fundamentals and sector positioning. The elevated delivery volumes and sustained open interest in call options suggest that market participants are preparing for a potential upside, possibly driven by upcoming earnings or sectoral recovery.

Given the mixed technical indicators and sector headwinds, a prudent approach would be to monitor price action closely in the coming weeks, particularly around key moving averages and the February expiry. Those with a bullish outlook may consider call options as a leveraged way to participate in a potential rebound, while risk-averse investors might await clearer confirmation of trend reversal.

Overall, HCL Technologies’ current market dynamics offer an intriguing opportunity for investors who can navigate near-term volatility with a focus on long-term growth prospects.

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