ITC Ltd Sees Heavy Call Option Activity Amid Bearish Technicals and Sell Rating

Call Option Activity Highlights

On 4 March 2026, ITC Ltd. emerged as the most active stock in call options, with the 320 strike price call options expiring on 30 March 2026 seeing the highest volume. A total of 5,436 contracts were traded, generating a turnover of ₹358.34 lakhs. Open interest for these contracts stands at 7,980, indicating sustained interest from traders betting on a potential upside in the near term. The underlying stock closed at ₹312.80, just ₹7.20 shy of the 320 strike, suggesting that traders are positioning for a breakout above this level within the expiry cycle.

Stock Price and Technical Context

Despite the bullish options activity, ITC’s stock price has been under pressure. It is currently trading 3.5% above its 52-week low of ₹302, reflecting a weak price momentum. The stock closed with a 1-day return of -0.84%, slightly underperforming the FMCG sector’s decline of -0.77%, though outperforming the broader Sensex’s fall of -1.92% on the same day. Notably, ITC is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — underscoring a bearish technical setup.

Investor participation, however, has been rising. Delivery volume on 2 March 2026 surged to 1.07 crore shares, marking a 34.53% increase over the 5-day average delivery volume. This uptick in delivery volume suggests that long-term investors may be accumulating shares despite the short-term weakness, possibly anticipating a turnaround or valuing the stock’s defensive qualities within FMCG.

Fundamental Assessment and Market Sentiment

MarketsMOJO recently downgraded ITC Ltd. from Hold to Sell on 9 February 2026, reflecting concerns over its fundamental outlook. The company’s Mojo Score stands at 48.0, placing it in the Sell category, with a Market Cap Grade of 1 despite its large-cap status at ₹3,91,225.19 crores. This downgrade signals deteriorating financial metrics or growth prospects relative to peers in the FMCG sector.

Expiry Patterns and Strike Price Significance

The 30 March 2026 expiry date is attracting significant attention, with the 320 strike price call options dominating volume and open interest. This strike is approximately 2.3% above the current underlying price, indicating that traders are betting on a moderate rally within the next four weeks. The high open interest at this strike price suggests a strong consensus among option traders that ITC could breach this level, potentially triggering further upside momentum.

However, the stock’s technical weakness and recent downgrade temper this optimism. The fact that ITC is trading below all major moving averages implies resistance overhead, which could cap gains in the near term. The divergence between option market bullishness and spot market weakness highlights a speculative element in the call option activity, possibly driven by short-term traders or hedgers rather than fundamental conviction.

Comparative Sector and Market Performance

Within the FMCG sector, ITC’s performance has been lacklustre. The sector itself declined by 0.77% on the day, while ITC fell by 0.84%, marginally underperforming its peers. The broader Sensex’s sharper decline of 1.92% suggests that ITC is relatively resilient compared to the overall market, which may explain some of the bullish option positioning as investors seek defensive plays amid volatility.

Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting trade sizes up to ₹9.85 crores based on 2% of the 5-day average traded value. This liquidity facilitates active options trading and allows institutional investors to enter or exit positions without significant price impact.

Investor Takeaways and Outlook

For investors, the current scenario presents a nuanced picture. The elevated call option activity at the 320 strike price expiry on 30 March 2026 suggests that market participants are positioning for a potential rebound in ITC’s share price. However, the fundamental downgrade to Sell and the stock’s technical underperformance caution against overly bullish bets.

Long-term investors may view the recent rise in delivery volumes as a sign of accumulation, possibly anticipating a recovery driven by ITC’s diversified FMCG portfolio and strong market presence. Conversely, short-term traders should be wary of the resistance posed by multiple moving averages and the risk of further downside if the stock fails to breach the 320 level.

Given ITC’s large market capitalisation of ₹3,91,225.19 crores and its defensive sector positioning, it remains a key stock to watch for shifts in market sentiment. The interplay between option market optimism and spot market caution will likely dictate price action in the coming weeks.

Conclusion

ITC Ltd.’s surge in call option trading ahead of the March expiry highlights a speculative bullish stance amid a backdrop of fundamental challenges and technical weakness. Investors should carefully weigh the risks and rewards, considering both the company’s recent downgrade and the potential for short-term price rallies driven by option market dynamics.

Monitoring open interest changes, strike price concentrations, and delivery volumes will be crucial for gauging the sustainability of this bullish positioning. As always, a balanced approach combining fundamental analysis with technical signals will serve investors best in navigating ITC’s evolving market landscape.

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