ITC Ltd Sees Heavy Call Option Activity Amid Bearish Price Momentum

Stock Performance and Market Context

ITC Ltd. closed at ₹340.85 on 7 January 2026, hovering just 0.76% above its 52-week low of ₹337.75. The stock has been on a persistent decline, losing 15.55% over the past six trading sessions. This bearish momentum is underscored by the stock trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — indicating sustained downward pressure. Investor participation has also waned, with delivery volumes dropping by 66.64% compared to the five-day average, suggesting cautious sentiment among shareholders.

Despite this, ITC remains a large-cap heavyweight with a market capitalisation of ₹4,27,676 crores, firmly entrenched in the FMCG sector. Its performance today was largely in line with the sector, which itself saw a modest decline of 0.11%, while the broader Sensex fell 0.17%. The stock’s liquidity remains robust, with an average traded value sufficient to support trade sizes up to ₹83.92 crores, ensuring ease of entry and exit for market participants.

Call Option Activity: A Closer Look

The most active call option for ITC Ltd. is the January 27, 2026 expiry with a strike price of ₹370. This contract saw 4,517 contracts traded, generating a turnover of ₹58.54 lakhs. Open interest stands at 20,442 contracts, reflecting substantial outstanding positions and indicating strong investor interest at this strike.

Given the current underlying price of ₹340.85, the ₹370 strike is out-of-the-money by approximately 8.5%. The heavy call buying at this level suggests a bullish positioning by some market participants, anticipating a potential rebound or volatility that could push the stock price higher before expiry. This is particularly notable given the stock’s recent downtrend and proximity to its yearly lows.

Open interest accumulation at this strike price often signals that traders are either hedging existing positions or speculating on a price recovery. The sizeable turnover and contract volume imply that institutional or sophisticated investors may be positioning for a directional move, possibly expecting a catalyst or sectoral tailwind in the coming weeks.

Technical and Sentiment Analysis

Technically, ITC’s failure to hold above key moving averages and the six-day losing streak point to bearish momentum. However, the surge in call option activity at a strike price above the current market price introduces a layer of complexity. It may indicate that some investors view the current weakness as a buying opportunity, expecting a reversal or at least a corrective bounce.

From a sentiment perspective, the MarketsMOJO Mojo Score for ITC stands at 48.0, categorised as a Sell with a recent downgrade from Hold on 29 December 2025. The Market Cap Grade is 1, reflecting its large-cap status but also signalling limited upside potential in the near term according to the proprietary scoring system. This downgrade aligns with the stock’s recent price action and subdued investor interest.

Investors should note that while the call option activity suggests some bullish bets, the overall technical and fundamental backdrop remains cautious. The stock’s liquidity and sector alignment provide some support, but the prevailing downtrend and falling delivery volumes caution against aggressive long positions without clear confirmation of a trend reversal.

Expiry Patterns and Strategic Implications

The January 27 expiry is just under three weeks away, a timeframe that often sees increased option activity as traders adjust positions ahead of expiry. The concentration of open interest at the ₹370 strike may lead to price pinning or increased volatility as expiry approaches, especially if the stock price moves closer to this level.

For traders, this scenario presents both opportunity and risk. Those bullish on ITC might consider the call options as a leveraged way to participate in a potential rebound, while cautious investors may view the heavy call activity as a signal to monitor for short-term volatility or hedging activity by larger players.

Outlook and Investor Considerations

ITC Ltd.’s current market dynamics reflect a stock in consolidation with bearish undertones but punctuated by pockets of bullish option interest. The downgrade to a Sell rating by MarketsMOJO and the stock’s technical weakness suggest caution for long-term investors. However, the active call option interest at the ₹370 strike price indicates that some market participants are positioning for a potential recovery or volatility spike.

Investors should weigh the stock’s fundamental strengths as a large-cap FMCG player against the recent price weakness and subdued investor participation. Monitoring open interest trends and expiry-related price action will be crucial in the coming weeks to gauge whether the bullish call activity translates into a sustained price turnaround or remains speculative positioning.

Given the stock’s liquidity and sector alignment, ITC remains a viable trading candidate for those with a higher risk tolerance, particularly in the derivatives segment. However, a cautious approach with defined risk management is advisable until clearer signs of trend reversal emerge.

Summary

In summary, ITC Ltd. is experiencing notable call option activity at the ₹370 strike expiring 27 January 2026, despite its stock trading near 52-week lows and enduring a six-day losing streak. The heavy call volume and open interest suggest bullish speculation or hedging, contrasting with the stock’s technical weakness and a recent downgrade to Sell. Investors should remain vigilant of expiry dynamics and sector trends while considering the stock’s large-cap stature and liquidity for potential trading opportunities.

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