ITC Ltd Sees Heavy Call Option Activity Amid Bearish Sentiment

Call Option Activity Highlights

On the expiry date of 24 February 2026, ITC Ltd. recorded the most active call option with a strike price of ₹323.5. A total of 5,819 contracts were traded, generating a turnover of ₹19.55 lakhs. The open interest stood at 5,049 contracts, indicating sustained interest in this strike level. The underlying stock price hovered around ₹324.0, closely aligned with the strike price, suggesting that traders are positioning themselves near the current market value.

Stock Performance and Market Context

ITC’s stock performance on the day was broadly in line with its FMCG sector peers, registering a modest decline of 0.40%, slightly outperforming the sector’s 0.56% fall and the Sensex’s 0.82% drop. However, the stock has been under pressure over the last two sessions, losing 0.92% cumulatively. This downward trend coincides with a downgrade in the company’s mojo grade from Hold to Sell on 9 February 2026, reflecting a more cautious outlook from analysts.

Technical indicators present a mixed picture. The stock price remains above its 20-day moving average but is trading below the 5-day, 50-day, 100-day, and 200-day moving averages. This suggests short-term weakness amid longer-term consolidation. Additionally, investor participation appears to be waning, with delivery volumes on 23 February falling by nearly 40% compared to the five-day average, signalling reduced conviction among shareholders.

Liquidity and Trading Dynamics

Liquidity remains adequate for sizeable trades, with the stock’s traded value supporting transactions up to ₹16.63 crores based on 2% of the five-day average traded value. This level of liquidity is crucial for options traders who require efficient execution without significant price impact.

Investor Sentiment and Strategic Positioning

The heavy call option volume at the ₹323.5 strike price, which is nearly at-the-money, suggests that investors are positioning for a potential rebound or are hedging against further downside. The open interest of 5,049 contracts indicates that many traders are holding onto these positions rather than closing them out, which could imply expectations of volatility or a directional move in the near term.

Given ITC’s mojo score of 48.0 and a sell grade, the market sentiment appears cautious. The downgrade from Hold to Sell on 9 February 2026 reflects concerns over the company’s near-term prospects, possibly influenced by sectoral headwinds or company-specific challenges. Despite this, the call option activity hints at pockets of bullishness or speculative interest, as traders may be anticipating a technical bounce or positive news catalysts.

Comparative Sector and Market Analysis

ITC’s performance relative to the FMCG sector and broader market indices is noteworthy. While the stock has underperformed slightly in recent days, it has shown resilience compared to the Sensex’s sharper decline. This relative strength could be attracting option traders looking to capitalise on potential sector rotation or stock-specific recovery.

However, the falling delivery volumes and the stock trading below several key moving averages caution against overly optimistic interpretations. The mixed technical signals and subdued investor participation suggest that any upward move may face resistance, making the current call option activity a blend of speculative positioning and hedging.

Outlook and Investor Takeaways

For investors and traders, the current scenario presents a nuanced picture. The elevated call option activity at a strike price close to the current market level suggests that some market participants are betting on a near-term recovery or volatility-driven gains. However, the fundamental and technical indicators caution that the stock remains under pressure, with a mojo grade firmly in the sell territory and declining investor participation.

Long-term investors may want to exercise patience and monitor upcoming quarterly results and sector developments before increasing exposure. Traders, meanwhile, should be mindful of the mixed signals and consider strategies that balance potential upside with risk management, such as spreads or protective puts.

ITC Ltd.’s Market Capitalisation and Industry Position

With a market capitalisation of ₹4,04,068 crores, ITC is a large-cap stalwart in the FMCG sector. Despite recent headwinds, its scale and diversified business model provide a degree of stability. The company’s mojo grade of 48.0, however, indicates that it currently falls short of the quality and momentum thresholds favoured by more bullish investors.

In summary, while the surge in call option activity at the ₹323.5 strike price on 24 February 2026 highlights active positioning and potential bullish sentiment, the broader market context and fundamental assessments counsel caution. Investors should weigh these factors carefully when considering ITC Ltd. in their portfolios.

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