ITC Ltd Sees Heavy Call Option Activity Amid Bearish Stock Momentum

Stock Performance and Market Context

ITC Ltd. (NSE: ITC) closed at ₹309.50 on 5 March 2026, hovering just 2.27% above its 52-week low of ₹302. The stock has been on a downward trajectory, losing 1.87% over the past two trading sessions and underperforming its FMCG sector peers by 0.32% on the day. This decline contrasts with the broader Sensex, which posted a modest gain of 0.66% on the same day.

Technical indicators reinforce the bearish trend, with ITC trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — suggesting sustained selling pressure. However, rising investor participation is evident, as delivery volumes surged to 1.74 crore shares on 4 March, marking a 108.68% increase over the five-day average delivery volume. This heightened activity points to increased interest, possibly from bargain hunters or speculative traders.

Call Option Activity: Strike Price and Expiry Insights

The most active call options for ITC are concentrated at the ₹350 strike price with an expiry date of 30 March 2026. On this expiry, 5,945 contracts were traded, generating a turnover of ₹30.44 lakhs. Open interest stands at 5,733 contracts, indicating a significant build-up of positions at this strike.

Given the current underlying price of ₹309.50, the ₹350 strike represents a 12.9% premium, suggesting that traders are positioning for a substantial upside within the next few weeks. This bullish positioning in the options market contrasts with the stock’s recent price weakness, hinting at divergent expectations between equity holders and derivatives traders.

Investor Sentiment and Market Implications

The surge in call option activity at a strike price well above the current market price may reflect speculative optimism or hedging strategies by institutional investors. Some market participants might be anticipating a rebound driven by upcoming corporate developments, sectoral tailwinds, or broader market recovery.

However, it is important to note that ITC’s Mojo Score has recently deteriorated to 48.0, with a downgrade from Hold to Sell on 9 February 2026. The company’s Market Cap Grade remains at 1, indicating a large-cap status but with limited growth momentum. This downgrade aligns with the stock’s technical weakness and may temper overly bullish expectations.

Comparative Sector and Market Analysis

Within the FMCG sector, ITC’s recent underperformance contrasts with some peers that have maintained relative stability or modest gains. The sector’s 1-day return stood at -0.39%, slightly better than ITC’s -0.67% return, underscoring the stock’s laggard status. The broader market’s positive movement further highlights ITC’s challenges in regaining investor confidence.

Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting a trade size of approximately ₹11.33 crore based on 2% of the five-day average. This liquidity facilitates active participation from institutional and retail investors alike, contributing to the observed option market dynamics.

Options Market as a Barometer of Future Expectations

The concentration of call option contracts at the ₹350 strike price expiring in less than a month suggests that traders are betting on a near-term recovery. This could be driven by expectations of positive quarterly results, strategic announcements, or sectoral catalysts such as rising commodity prices or regulatory changes favouring FMCG companies.

Nevertheless, the open interest data also implies that some investors may be using call options as a hedge against existing short positions or as a leveraged play to capitalise on potential volatility. The interplay between these factors makes the options market a nuanced indicator of sentiment rather than a straightforward bullish signal.

Outlook and Investor Considerations

Investors analysing ITC Ltd. should weigh the mixed signals from the equity and derivatives markets carefully. While the call option activity indicates some degree of bullish speculation, the stock’s technical weakness and recent downgrade suggest caution. The company’s large market capitalisation of ₹3,88,907 crore underscores its significance in the FMCG sector, but the current Mojo Grade of Sell reflects concerns over near-term performance.

For long-term investors, monitoring upcoming quarterly results, management commentary, and sectoral developments will be crucial. Traders may find opportunities in the options market to capitalise on volatility, but should remain mindful of the risks associated with betting on a swift recovery from near 52-week lows.

In summary, ITC Ltd.’s recent surge in call option contracts at a premium strike price highlights a divergence in market expectations. This dynamic warrants close observation as expiry approaches on 30 March 2026, with potential implications for both equity and derivatives investors.

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