ITC Ltd Sees Heavy Put Option Activity Ahead of February Expiry

Heavy Put Option Trading Highlights Bearish Positioning

Data from the derivatives market reveals that ITC Ltd. has emerged as the most active stock in put options trading, with significant volumes concentrated at the ₹320 and ₹325 strike prices expiring on 24 February 2026. Specifically, 2,998 contracts were traded at the ₹320 strike, generating a turnover of ₹37.89 lakhs and an open interest of 2,642 contracts. Meanwhile, the ₹325 strike saw 2,393 contracts traded, with turnover reaching ₹81.55 lakhs and open interest standing at 2,034 contracts.

The underlying stock price at the time was ₹329.60, placing these strike prices just below the current market level. This concentration of put activity close to the money indicates that investors are either hedging existing long positions or speculating on a potential near-term decline.

Stock Performance and Technical Context

ITC Ltd. has been on a three-day winning streak, delivering a cumulative return of 4.41% during this period. However, the stock underperformed its FMCG sector peers by 0.98% on the day, with the sector gaining 1.99% compared to ITC’s 1.06%. The Sensex remained largely flat, up just 0.03%, underscoring the stock’s relative weakness within its segment.

Technically, ITC’s price is trading above its 5-day and 20-day moving averages but remains below the longer-term 50-day, 100-day, and 200-day averages. This mixed technical picture suggests short-term strength amid longer-term resistance, which may be prompting investors to seek downside protection through put options.

Investor participation has also risen sharply, with delivery volumes on 17 February reaching 2.47 crore shares, a 174.36% increase over the five-day average. This heightened activity reflects growing interest and possibly repositioning ahead of the options expiry.

Implications of Elevated Put Open Interest

The open interest figures at the ₹320 and ₹325 strikes, standing at 2,642 and 2,034 contracts respectively, are significant given the stock’s current price. Elevated put open interest near the money often signals investor caution or outright bearish bets, as traders anticipate a possible price correction or increased volatility.

Such positioning can also reflect hedging strategies by institutional investors seeking to protect gains accrued during the recent rally. The fact that the stock’s market capitalisation remains robust at ₹4,07,576 crore, categorising it as a large-cap entity, does not preclude short-term volatility, especially in a sector as sensitive as FMCG.

Sectoral and Market Context

Within the FMCG sector, ITC’s recent underperformance relative to peers may be contributing to the cautious stance. The sector has generally benefited from steady consumer demand, but rising input costs and inflationary pressures have introduced uncertainties. Investors appear to be balancing these factors by increasing downside protection through options.

Liquidity metrics support active trading in ITC shares, with the stock’s traded value comfortably supporting trade sizes up to ₹13.5 crore based on 2% of the five-day average traded value. This liquidity ensures that option market activity is backed by a vibrant underlying market, reducing execution risks for traders.

Mojo Score and Analyst Ratings

ITC Ltd.’s current Mojo Score stands at 48.0, reflecting a cautious outlook. The Mojo Grade was downgraded from Hold to Sell on 9 February 2026, signalling a deterioration in the stock’s fundamental and technical assessment. The market cap grade remains at 1, indicating its large-cap status but not necessarily a favourable valuation or momentum.

This downgrade aligns with the increased put option activity, reinforcing the view that investors are bracing for potential downside or volatility in the near term. While the stock has shown resilience in recent days, the combination of technical resistance and sectoral headwinds warrants a prudent approach.

Expiry Patterns and Investor Strategy

The 24 February 2026 expiry is attracting the bulk of put option interest, suggesting that traders are positioning for developments within the next week. This expiry cycle often sees heightened volatility as traders adjust or close positions ahead of settlement.

Investors holding long positions in ITC may be utilising these puts as insurance against a pullback, while speculators might be betting on a correction given the stock’s failure to decisively break above longer-term moving averages. The strike prices chosen indicate a focus on downside protection around the ₹320-₹325 range, just below the current market price.

Conclusion: Cautious Sentiment Prevails Despite Recent Gains

In summary, ITC Ltd.’s surge in put option volumes and open interest at near-the-money strikes ahead of the 24 February expiry highlights a growing bearish or hedging sentiment among investors. Despite a short-term rally and increased delivery volumes, the stock’s technical setup and sectoral challenges have prompted market participants to seek downside protection.

With the Mojo Grade downgraded to Sell and the stock underperforming its sector peers, investors should carefully monitor price action and option market dynamics in the coming days. The elevated put activity serves as a cautionary signal, suggesting that while ITC remains a large-cap stalwart, near-term risks are elevated and warrant prudent risk management.

Unlock special upgrade rates for a limited period. Start Saving Now →