ITC Ltd Sees Heavy Put Option Activity Amid Bearish Market Sentiment

Put Option Activity Highlights

The most active put options for ITC Ltd. are concentrated around the 340 strike price, with expiry set for 27 January 2026. On this date, a substantial 5,144 contracts were traded, generating a turnover of ₹370.368 lakhs. Open interest at this strike remains elevated at 8,337 contracts, underscoring sustained investor interest in downside protection or speculative bearish bets.

Given the underlying stock price of ₹341.5, the 340 strike puts are positioned just below the current market level, suggesting that traders are bracing for a potential dip below this threshold. The high open interest coupled with active trading volume indicates that this strike price is a key focal point for market participants.

Price and Technical Context

ITC Ltd. closed merely 1.26% above its 52-week low of ₹337.75, reflecting a precarious position near multi-month lows. The stock has endured a five-day losing streak, shedding approximately 15.12% in returns during this period. This decline is in line with sectoral trends, as the FMCG sector has also experienced pressure, albeit with a slightly larger one-day loss of 0.38% compared to ITC’s 0.16% drop.

Technically, ITC is trading below all major moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a sustained downtrend. The narrow trading range of ₹3.25 over recent sessions suggests consolidation but with a bearish bias given the prevailing momentum.

Investor participation appears to be waning, with delivery volumes on 6 January falling by 23.57% to 4.67 crore shares compared to the five-day average. Despite this, liquidity remains adequate, with the stock supporting trade sizes up to ₹81.27 crore based on 2% of the five-day average traded value.

Mojo Score and Analyst Ratings

ITC Ltd. currently holds a Mojo Score of 48.0, categorised as a 'Sell' grade by MarketsMOJO, a downgrade from its previous 'Hold' rating as of 29 December 2025. The downgrade reflects deteriorating fundamentals and technical weakness, signalling caution for investors. The company’s market cap grade stands at 1, indicating its status as a large-cap stock with significant market presence but limited upside momentum in the near term.

This rating shift aligns with the increased put option activity, as market participants appear to be adjusting their portfolios in response to the stock’s weakening trend and subdued investor sentiment.

Expiry Patterns and Investor Positioning

The expiry date of 27 January 2026 is attracting considerable attention, with put options at the 340 strike price dominating volumes. This pattern suggests that traders are either hedging existing long positions or speculating on further downside. The concentration of open interest at this strike price also implies that a breach below ₹340 could trigger additional selling pressure or option-related market moves.

Given the stock’s proximity to its 52-week low and the ongoing downtrend, the put option activity can be interpreted as a defensive stance by investors seeking to limit losses or capitalise on bearish momentum. The relatively high turnover in these contracts further emphasises the urgency among traders to manage risk ahead of the expiry.

Sectoral and Market Comparison

While ITC’s one-day return of -0.16% is slightly better than the FMCG sector’s -0.38% and the Sensex’s -0.13%, the stock’s five-day performance paints a more concerning picture. The 15.12% decline over this period is sharper than typical sectoral moves, highlighting company-specific challenges or investor concerns.

Such divergence often prompts increased options activity as traders seek to hedge or speculate on stock-specific risks. The FMCG sector, known for its defensive qualities, is currently under pressure, and ITC’s put option surge reflects a more pronounced bearish positioning relative to its peers.

Implications for Investors

The surge in put option volumes at the 340 strike price and the stock’s technical weakness suggest that investors should exercise caution with ITC Ltd. in the near term. The downgrade to a 'Sell' rating by MarketsMOJO reinforces the view that downside risks remain elevated.

Investors holding long positions may consider protective strategies such as buying puts or tightening stop-loss levels to mitigate potential losses. Conversely, traders with a bearish outlook might view the current option activity as confirmation of a likely continuation of the downtrend, presenting opportunities to capitalise on further declines.

However, the stock’s large-cap status and liquidity provide some comfort that any price movements will be orderly, allowing for efficient execution of hedging or speculative trades.

Outlook and Conclusion

ITC Ltd.’s recent market behaviour, characterised by a steady decline, proximity to 52-week lows, and heightened put option activity, signals a cautious environment for investors. The concentration of put contracts at the 340 strike price ahead of the January expiry highlights a market expectation of continued pressure or at least a desire to hedge against downside risks.

While the FMCG sector remains a defensive bastion in volatile markets, ITC’s current technical and fundamental signals suggest that investors should reassess their exposure and consider alternative opportunities within the sector or beyond.

Monitoring open interest trends and expiry dynamics will be crucial in the coming weeks to gauge whether the bearish sentiment intensifies or if a reversal emerges.

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