ITC Ltd Sees Heavy Call Option Activity Amid Bearish Price Momentum

Stock Performance and Market Context

ITC Ltd. (Stock ID: 397071) has been under pressure in recent sessions, recording a consecutive five-day decline that has eroded approximately 15.12% of its value. The stock closed at ₹341.50 on 6 January 2026, just 1.26% above its 52-week low of ₹337.75. This performance aligns closely with the broader FMCG sector, which saw a 0.38% decline on the same day, while the Sensex marginally dipped by 0.13%.

Technical indicators reinforce the bearish sentiment, with ITC trading below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—signalling sustained downward momentum. Additionally, investor participation has waned, as evidenced by a 23.57% drop in delivery volume to 4.67 crore shares compared to the five-day average, suggesting cautious sentiment among shareholders.

Despite this, liquidity remains robust, with the stock's average traded value supporting sizeable transactions up to ₹81.27 crore, ensuring that option market activity is underpinned by sufficient underlying stock liquidity.

Call Option Activity: Strike Price and Expiry Insights

The most active call options for ITC are concentrated at the ₹380 strike price, with expiry set for 27 January 2026. On this date, a substantial 10,702 contracts were traded, generating a turnover of approximately ₹95.89 lakh. Open interest at this strike stands at 21,654 contracts, indicating a strong build-up of bullish bets or hedging positions ahead of the expiry.

This strike price is notably above the current underlying value, implying that traders are speculating on a significant upside move of nearly 11.3% within the next three weeks. Such positioning may reflect expectations of a technical rebound or positive triggers in the FMCG sector or ITC’s business fundamentals.

Investor Sentiment and Market Positioning

While the surge in call option volume might suggest bullish sentiment, the broader context paints a more nuanced picture. ITC’s Mojo Score currently stands at 48.0, with a Mojo Grade of Sell, downgraded from Hold as of 29 December 2025. This downgrade reflects deteriorating fundamentals or technical weakness, signalling caution for investors.

The company’s market capitalisation remains substantial at ₹4,29,242 crore, categorising it as a large-cap stock. However, its Market Cap Grade is rated at 1, indicating limited upside potential relative to peers. The recent decline in stock price and delivery volumes further corroborate a cautious stance among institutional and retail investors alike.

Nevertheless, the active call option interest at the ₹380 strike price suggests that some market participants are either hedging existing short positions or speculating on a near-term recovery. The expiry date of 27 January 2026 is critical, as it may coincide with corporate announcements, quarterly results, or sectoral developments that could catalyse price movements.

Options Market Dynamics and Expiry Patterns

Options expiry weeks often bring heightened volatility, and ITC’s options market is no exception. The concentration of open interest and turnover at the ₹380 call strike indicates a focal point for price action. Traders holding these contracts will benefit only if the stock rallies above this level before expiry, factoring in the premium paid.

Given the stock’s current trading range of just ₹3.25 on the day, volatility remains subdued, but the options market activity hints at expectations for a breakout. The narrow trading range juxtaposed with heavy call buying may also reflect strategic positioning for an anticipated event or technical reversal.

Investors should monitor the evolving open interest and volume trends closely, as shifts in these metrics can provide early signals of directional bias or profit-taking ahead of expiry.

Implications for Investors and Traders

For investors, ITC’s current profile suggests a cautious approach. The downgrade to a Sell rating and the stock’s underperformance relative to its moving averages indicate that downside risks remain. However, the active call option interest at a strike price well above the current market level signals that some traders are betting on a recovery or volatility spike in the near term.

Traders with a higher risk appetite may view the call option activity as an opportunity to capitalise on potential rebounds or event-driven price swings. Conversely, long-term investors should weigh the fundamental challenges reflected in the Mojo Grade and recent price trends before increasing exposure.

Monitoring the stock’s price action as it approaches the 27 January expiry will be crucial. A sustained move above the ₹380 level could validate the bullish option positioning, while failure to breach this strike may result in premium erosion and renewed selling pressure.

Overall, ITC Ltd. remains a stock to watch closely, with its options market providing valuable insights into investor expectations amid a challenging market environment.

Conclusion

ITC Ltd.’s recent surge in call option trading at the ₹380 strike price ahead of the 27 January 2026 expiry contrasts with its bearish stock performance and downgraded fundamental outlook. This divergence highlights the complexity of market sentiment, where speculative positioning and hedging strategies coexist with cautious investor behaviour. As the expiry date approaches, the interplay between stock price movements and options market dynamics will be pivotal in shaping ITC’s near-term trajectory.

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