ITC Ltd Sees Heavy Put Option Activity Amid Bearish Market Sentiment

Put Option Activity Highlights

On 8 January 2026, ITC Ltd. emerged as the most active stock in put options trading, with 1,993 contracts changing hands for the expiry dated 27 January 2026. The strike price attracting the highest volume was ₹340, closely aligned with the current underlying value of ₹340.80. This strike price is particularly significant as it sits just above the stock’s recent trading levels, suggesting investors are positioning for potential downside or seeking protection against further declines.

The turnover for these put contracts reached ₹155.93 lakhs, reflecting substantial investor interest in downside protection. Open interest at this strike stands at 8,733 contracts, indicating a sizeable build-up of bearish bets or hedges that could influence price dynamics as expiry approaches.

Price and Technical Context

ITC’s share price has been under pressure, trading just 0.76% above its 52-week low of ₹337.75. The stock has endured a six-day consecutive decline, shedding approximately 15.55% over this period. This sustained weakness is mirrored in its technical indicators, with the share price currently below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a bearish trend across multiple timeframes.

Investor participation appears to be waning, as evidenced by a sharp 66.64% drop in delivery volume on 7 January to 1.99 crore shares compared to the five-day average. Despite this, liquidity remains adequate, with the stock’s traded value supporting sizeable transactions up to ₹83.92 crore based on 2% of the five-day average traded value.

Sector and Market Comparison

ITC’s performance today was broadly in line with the FMCG sector, which declined by 0.11%, while the Sensex fell 0.17%. The stock’s one-day return was a marginal -0.07%, reflecting relative stability amid sector-wide weakness. However, the growing put option interest suggests investors are increasingly wary of further downside risks, possibly anticipating continued sector headwinds or company-specific challenges.

Mojo Score and Analyst Ratings

ITC Ltd. currently holds a Mojo Score of 48.0, categorised as a Sell, reflecting a downgrade from its previous Hold rating on 29 December 2025. This downgrade aligns with the deteriorating technical and fundamental outlook, signalling caution for investors. The company’s market capitalisation remains robust at ₹4,27,676 crore, placing it firmly in the large-cap segment, but the low Market Cap Grade of 1 indicates limited upside potential relative to its size.

Implications of Put Option Interest

The surge in put option activity at the ₹340 strike price ahead of the 27 January expiry suggests that market participants are either hedging existing long positions or speculating on further declines. Given the stock’s proximity to its 52-week low and the sustained downtrend, this heightened put interest may also reflect broader concerns about ITC’s near-term earnings prospects or sectoral pressures such as regulatory challenges and input cost inflation.

Open interest accumulation in puts often precedes increased volatility, especially as expiry approaches. Traders and institutional investors may be positioning for a potential breakdown below key support levels, which could trigger stop-loss selling and exacerbate downward momentum.

Investor Strategy and Market Outlook

For investors, the current environment calls for a cautious approach. While ITC’s large-cap status and diversified FMCG portfolio provide some defensive qualities, the technical signals and option market activity suggest limited near-term upside. Investors may consider protective strategies such as buying puts or employing collars to mitigate downside risk.

Meanwhile, those with a bearish outlook might view the elevated put volumes as confirmation of a weakening trend, potentially capitalising on short-term declines. However, it is essential to monitor broader market conditions and sectoral developments, as FMCG stocks can be sensitive to macroeconomic factors and consumer sentiment shifts.

Expiry Patterns and Market Sentiment

The January expiry cycle is proving pivotal for ITC, with the ₹340 put strike dominating open interest and turnover. This concentration suggests a consensus among traders that the stock may struggle to hold above this level in the short term. Historically, expiry weeks can bring heightened volatility as option writers and holders adjust positions, potentially leading to sharp price movements.

Market sentiment towards ITC appears increasingly bearish, with the downgrade in Mojo Grade reinforcing this view. The stock’s underperformance relative to its sector and the broader Sensex further corroborates investor caution. However, given ITC’s entrenched market position and diversified revenue streams, any recovery could be swift if positive catalysts emerge.

Conclusion

In summary, ITC Ltd.’s recent surge in put option activity at the ₹340 strike price ahead of the 27 January expiry highlights growing bearish sentiment and hedging demand. The stock’s technical weakness, combined with a downgrade to a Sell rating and falling investor participation, paints a cautious picture for the near term. Investors should closely monitor option market trends and price action, balancing downside protection with the potential for recovery in this large-cap FMCG stalwart.

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