ITC Ltd Sees Heavy Call Option Activity Amid Bearish Stock Momentum

Stock Performance and Market Context

On 6 January 2026, ITC Ltd. (NSE: ITC) closed at ₹344.45, marking a decline of 1.63% on the day and continuing a four-day losing streak that has eroded approximately 14.62% of its value. This downturn contrasts with the broader FMCG sector’s 1.81% decline and the Sensex’s relatively modest 0.32% fall, underscoring ITC’s underperformance within its industry group.

The stock’s recent slide culminated in a fresh 52-week low of ₹343.30, reflecting persistent selling pressure. Technical indicators reveal ITC trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling a sustained bearish trend. Furthermore, delivery volumes have dropped sharply, with 3.07 crore shares delivered on 5 January representing a 45.05% decrease against the five-day average, indicating waning investor participation.

Despite these headwinds, ITC remains a large-cap heavyweight with a market capitalisation of ₹4,36,070 crore, maintaining liquidity sufficient to support trades up to ₹72.84 crore based on 2% of its five-day average traded value.

Surge in Call Option Activity

Contrary to the stock’s bearish price action, the derivatives market reveals robust call option interest, particularly for contracts expiring on 27 January 2026. The most actively traded call options cluster around strike prices of ₹350, ₹360, ₹370, and ₹380, all above the current underlying price, suggesting a degree of bullish speculation or hedging strategies among market participants.

The ₹360 strike call option leads in volume with 19,218 contracts traded, generating a turnover of ₹701.07 lakh and an open interest of 18,797 contracts. Close behind is the ₹380 strike call with 19,468 contracts traded, turnover of ₹218.04 lakh, and open interest of 21,184 contracts. The ₹370 strike call also shows significant activity with 17,417 contracts traded, ₹320.47 lakh turnover, and the highest open interest of 23,545 contracts. Meanwhile, the ₹350 strike call recorded 16,710 contracts traded and a turnover of ₹1,473.15 lakh, with open interest at 17,349 contracts.

This concentration of call option activity at strikes above the current market price indicates that traders are positioning for a potential rebound or are employing complex option strategies such as spreads or hedges to manage risk amid volatility.

Mojo Score and Analyst Sentiment

ITC’s current MarketsMOJO score stands at 48.0, reflecting a cautious outlook. The company’s Mojo Grade was downgraded from Hold to Sell on 29 December 2025, signalling a deterioration in fundamental and technical assessments. The Market Cap Grade remains at 1, indicating its large-cap status but not necessarily a positive valuation metric in the current context.

These ratings align with the stock’s recent price weakness and subdued investor interest, suggesting that analysts are wary of near-term headwinds despite ITC’s entrenched market position in the FMCG sector.

Expiry Patterns and Investor Positioning

The expiry date of 27 January 2026 is attracting heightened attention, with open interest in call options concentrated at strikes ranging from ₹350 to ₹380. This pattern suggests that traders are either anticipating a recovery above these levels or are utilising these strikes for strategic option plays such as covered calls or bull call spreads.

Given the underlying price of ₹344.45, the ₹350 strike is just out-of-the-money, while the ₹360, ₹370, and ₹380 strikes are progressively more out-of-the-money, indicating varying degrees of bullish conviction or speculative bets on a rebound within the next three weeks.

Open interest data reveals that the ₹370 strike holds the largest open interest, implying that this level may be a key psychological or technical barrier for market participants. The substantial turnover and volume at these strikes also point to active repositioning ahead of the expiry, with traders balancing risk and reward amid uncertain market conditions.

Balancing Bearish Trends with Bullish Option Plays

While ITC’s stock price has been under pressure, the surge in call option activity suggests a nuanced market view. Some investors may be using call options as a hedge against short positions or as a low-cost way to participate in a potential upside recovery. Others might be speculating on a short-term bounce driven by sector dynamics or company-specific news.

However, the downgrade to a Sell rating and the stock’s technical weakness caution against overly optimistic positioning. Investors should weigh the risks of continued downside against the potential for a rebound, especially given the stock’s liquidity and large-cap status which can support significant trading volumes but also amplify volatility.

Outlook and Investor Takeaways

ITC Ltd.’s current market dynamics present a complex picture. The stock’s technical weakness and downgrade to Sell suggest caution, yet the active call option market reveals pockets of bullish sentiment or hedging activity. Investors should monitor the stock’s price action closely, particularly around the January expiry, to gauge whether the option market’s optimism translates into a sustained recovery.

Given the stock’s large-cap status and liquidity, it remains a key FMCG sector bellwether, but the recent performance and analyst downgrades highlight the need for careful risk management. Those considering exposure to ITC should balance the potential for short-term rebounds against the prevailing downtrend and sector headwinds.

Ultimately, the interplay between the derivatives market and underlying stock price will be critical in shaping ITC’s trajectory in the coming weeks.

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