ITC Ltd Declines 1.16% Despite Active Options Market: 3 Key Factors Shaping the Week

4 May: Heavy Call Option Activity Signals Cautious Optimism

On 4 May 2026, ITC Ltd recorded significant call option activity at the 350 strike price expiring on 26 May, with 10,731 contracts traded and a turnover of approximately ₹87.56 lakhs. This strike price is nearly 12% above the stock’s closing price of Rs.311.00, indicating that traders were positioning for a potential rally despite the stock’s modest 0.14% gain that day. The open interest of 5,574 contracts further underscored sustained investor engagement.

Despite this bullish options positioning, the stock’s price showed a slight decline of 0.89% on the day, underperforming the Sensex which closed flat to slightly positive. Technical indicators revealed that ITC was trading above its short- and medium-term moving averages but remained below its longer-term 100-day and 200-day averages, suggesting a mixed momentum picture.

Delivery volumes declined sharply, signalling reduced investor participation, possibly reflecting profit-taking or a cautious stance ahead of upcoming market events. Nevertheless, liquidity remained adequate for sizeable trades, supporting institutional activity.

5 May: Divergent Option Activity Reflects Mixed Technical Signals

The 5 May session saw ITC Ltd’s stock price close at Rs.311.45, a marginal gain of 0.14%, while the Sensex declined 0.09%. The day was marked by robust call option activity at the 315 and 320 strike prices, with 3,147 and 2,816 contracts traded respectively, generating turnovers of ₹266.36 lakhs and ₹150.49 lakhs. Open interest was substantial at these strikes, with 7,382 contracts at 315 and 8,506 at 320, signalling bullish sentiment among traders anticipating a near-term price rise.

Simultaneously, heavy put option activity was recorded at the 310 strike price, with 4,398 contracts traded and a turnover of ₹345.5 lakhs. The open interest of 2,306 contracts at this strike indicated a significant number of traders hedging against or speculating on downside risk. This dual activity in calls and puts highlights a cautious market stance, balancing optimism with protective hedging.

Technically, ITC’s price was above its 5-day, 20-day, and 50-day moving averages, suggesting short- to medium-term strength, but remained below the 100-day and 200-day averages, indicating longer-term resistance. Delivery volumes rose by 21.02% over the five-day average, reflecting increased investor participation and interest.

ITC’s Mojo Score stood at 57.0 with a Hold grade, upgraded from Sell, reflecting stabilising fundamentals but advising caution. Liquidity remained strong, supporting trade sizes up to ₹11.91 crore, facilitating active options and equity trading.

6-8 May: Price Declines Amid Market Gains and Continued Volatility

From 6 to 8 May, ITC’s share price declined steadily, closing at Rs.310.60 (-0.27%) on 6 May, Rs.307.65 (-0.95%) on 7 May, and Rs.307.40 (-0.08%) on 8 May. This represented a cumulative weekly decline of 1.16%, contrasting with the Sensex’s 1.25% gain over the same period. The stock’s underperformance amid a rising market suggests profit-taking or cautious positioning ahead of the May expiry.

Volumes remained robust, with daily trades exceeding 800,000 shares, supporting liquidity. The stock’s technical setup remained mixed, with short-term averages holding but longer-term averages continuing to act as resistance. The persistent put option interest at the 310 strike price during this period underscored market caution, with traders hedging against potential downside.

Key Takeaways

Mixed Option Market Sentiment: The week’s heavy call option activity at strikes well above the current price (350, 315, 320) contrasted with significant put option volumes at the 310 strike. This duality reflects a market balancing cautious optimism with protective hedging ahead of the 26 May expiry.

Technical Indicators Signal Caution: ITC’s price consistently traded above short- and medium-term moving averages but remained below longer-term 100-day and 200-day averages. This divergence suggests that while short-term momentum shows some strength, longer-term resistance persists, limiting upside potential.

Price Underperformance vs Sensex: Despite the broader market’s 1.25% gain, ITC’s share price declined 1.16%, indicating relative weakness and possible profit-taking or sector-specific headwinds.

Improved Fundamentals but Hold Rating: The Mojo Score upgrade to 57.0 and Hold grade reflects stabilising fundamentals but advises prudence amid mixed technicals and market uncertainty.

Robust Liquidity and Investor Participation: Delivery volumes and traded values supported active trading and options activity, ensuring institutional and retail investors can transact sizeable positions without undue market impact.

Conclusion

ITC Ltd’s week was characterised by a nuanced market stance, with investors exhibiting both bullish and bearish positioning through options activity. The stock’s modest decline amid a rising Sensex highlights underlying caution, reinforced by mixed technical signals and a Hold rating. While the call option interest at higher strikes suggests some optimism for a rally, the heavy put option volumes and resistance at longer-term moving averages temper expectations.

As the 26 May expiry approaches, monitoring open interest shifts, price action around key strike prices, and volume trends will be critical to gauge the sustainability of current sentiment. Investors should remain attentive to sectoral developments and broader market conditions that could influence ITC’s near-term trajectory.

Get Started for only Rs. 16,999 - Get MojoOne for 2 Years + 1 Year Absolutely FREE! (72% Off) Start Today