ITC Ltd Sees Heavy Call Option Activity Amid Mixed Price Signals

Robust Call Option Trading Highlights Investor Optimism

The most active call option for ITC Ltd. is the 335 strike price expiring on 24 February 2026, with 5,656 contracts traded on the day. This activity generated a turnover of ₹15.75 crores, reflecting substantial investor interest in bullish bets above the current underlying price of ₹329.75. Open interest at this strike stands at 4,355 contracts, indicating sustained positions rather than mere speculative intraday trades.

This level of call option volume and open interest suggests that market participants are positioning for a potential upside move in ITC’s share price over the coming week. The 335 strike is just above the current market price, implying expectations of a modest rally or at least a stabilisation above this level by expiry.

Price and Technical Context: Mixed Signals

ITC’s stock price has recently experienced a mild pullback, falling 0.77% on the day to ₹329.75, slightly underperforming the FMCG sector’s 0.40% decline and the broader Sensex’s 0.13% fall. Notably, the stock reversed after three consecutive days of gains, signalling some profit-taking or short-term caution among traders.

From a technical standpoint, ITC’s price remains above its 5-day and 20-day moving averages, which often indicate short-term strength. However, it continues to trade below its 50-day, 100-day, and 200-day moving averages, suggesting that medium- to long-term momentum remains subdued. This mixed technical picture may explain the cautious yet optimistic positioning seen in the options market.

Rising Investor Participation and Liquidity Support Active Trading

Delivery volume on 18 February surged to 2.08 crore shares, a 63.9% increase over the five-day average delivery volume, signalling rising investor participation. This heightened activity supports the liquidity necessary for active options trading and indicates genuine interest rather than speculative noise.

Liquidity metrics confirm that ITC is sufficiently liquid to handle trade sizes of up to ₹15.34 crores based on 2% of the five-day average traded value, making it an attractive stock for institutional and retail traders alike.

Fundamental and Market Grade Overview

ITC Ltd. is classified as a large-cap stock with a market capitalisation of ₹4,13,339.28 crores, operating primarily in the FMCG sector. Despite its size and market presence, the company’s current MarketsMOJO score stands at 48.0, reflecting a cautious outlook. The Mojo Grade was downgraded from Hold to Sell on 9 February 2026, signalling deteriorating fundamentals or valuation concerns as assessed by the proprietary scoring model.

The Market Cap Grade is rated at 1, indicating the stock’s large size but also suggesting limited upside potential relative to peers. This downgrade and moderate score may temper enthusiasm among long-term investors, even as short-term option traders position for a rebound.

Expiry Patterns and Strike Price Significance

The 24 February 2026 expiry is the nearest monthly expiry, and the concentration of call option activity at the 335 strike price is noteworthy. This strike is slightly out-of-the-money relative to the current price, implying that traders expect ITC to breach this level within the next week. The open interest build-up at this strike also suggests that many investors are either hedging existing positions or speculating on a near-term upside breakout.

Such positioning often precedes volatility around expiry dates, as traders adjust or close positions. The combination of rising delivery volumes and active options trading could lead to increased price swings in the coming days.

Comparative Sector and Market Performance

ITC’s performance today was broadly in line with the FMCG sector, which declined by 0.40%, and slightly worse than the Sensex’s marginal 0.13% drop. This relative underperformance, coupled with the downgrade in Mojo Grade, suggests that the stock faces headwinds from both sectoral pressures and company-specific factors.

However, the active call option interest indicates that some market participants are betting on a turnaround or at least a stabilisation above the 335 level, which could provide a short-term floor for the stock price.

Implications for Investors and Traders

For investors, the downgrade to a Sell grade and the stock’s position below key longer-term moving averages suggest caution. The fundamental outlook appears challenged, and the stock may face resistance near the 335 level in the short term.

Conversely, traders focusing on options markets may find opportunities in the current elevated call option activity. The concentration of open interest and turnover at the 335 strike price indicates a consensus expectation of a modest price recovery or at least a trading range above ₹330 in the near term.

Given the rising delivery volumes and liquidity, active traders can execute sizeable positions without significant market impact, but should remain vigilant for volatility spikes as expiry approaches.

Conclusion: Balanced Outlook Amid Divergent Signals

ITC Ltd. currently presents a nuanced picture. While the fundamental and technical indicators lean towards caution, the derivatives market reveals pockets of bullish sentiment. The heavy call option activity at the 335 strike price for the 24 February expiry underscores a market expectation of potential upside or price stability in the short term.

Investors should weigh the recent downgrade and mixed moving average signals against the active options positioning and rising investor participation. Those with a higher risk tolerance may consider tactical trades around the expiry, while long-term holders might await clearer signs of trend reversal before increasing exposure.

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