Heavy Put Option Trading Highlights Bearish Positioning
On 9 January 2026, ITC Ltd. emerged as the most active stock in put options, with 2,413 contracts traded for the 27 January expiry at the ₹340 strike price. This activity generated a turnover of ₹22.35 crores, reflecting significant investor interest in downside protection or speculative bearish bets. The open interest at this strike stands at 8,425 contracts, indicating sustained positioning ahead of expiry.
The underlying stock price closed at ₹340.15, hovering just 0.47% above its 52-week low of ₹337.75. This proximity to the annual low, combined with a seven-day consecutive decline resulting in a -15.79% return over the period, has likely intensified put buying as traders seek to hedge or capitalise on further downside risk.
Technical Weakness Reinforces Negative Sentiment
ITC’s technical indicators paint a bearish picture. The stock is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling sustained downward momentum. Additionally, delivery volumes have dropped sharply, with a 60.99% decline in delivery volume to 2.42 crore shares on 8 January compared to the five-day average, suggesting waning investor participation and potential selling pressure.
Liquidity remains adequate, with the stock’s traded value supporting a trade size of approximately ₹45.16 crores based on 2% of the five-day average traded value, ensuring that option and stock trades can be executed without significant slippage.
Fundamental and Market Context
ITC Ltd. operates in the FMCG sector, a traditionally defensive industry, but the company’s mojo score of 48.0 and a recent downgrade from Hold to Sell on 29 December 2025 reflect deteriorating fundamentals or market sentiment. The market capitalisation stands at a robust ₹4,27,112 crores, classifying ITC as a large-cap stock. Despite this, the stock’s one-day return of -0.43% underperformed the sector’s -0.26% and the Sensex’s -0.19%, highlighting relative weakness.
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Expiry Patterns and Investor Strategies
The January 27 expiry is attracting concentrated put option activity at the ₹340 strike, which is effectively at-the-money given the current stock price. This suggests investors are positioning for potential downside or protecting existing long stock holdings against further declines. The high open interest at this strike price also indicates that many traders may be rolling over bearish bets from previous expiries or establishing fresh hedges.
Put option buying at this level can serve multiple purposes: speculative short positions anticipating further price drops, portfolio insurance for long investors, or part of complex option strategies such as collars or spreads. Given ITC’s recent seven-day losing streak and technical weakness, the surge in put activity aligns with a cautious or bearish outlook among market participants.
Comparative Sector and Market Analysis
Within the FMCG sector, ITC’s performance has lagged peers, as evidenced by its underperformance relative to the sector’s one-day return of -0.26%. The broader market, represented by the Sensex, declined by a milder -0.19%, underscoring ITC’s relative vulnerability. This divergence may be driving investors to seek downside protection through options, especially given the stock’s proximity to its 52-week low.
Moreover, the downgrade in mojo grade from Hold to Sell by MarketsMOJO on 29 December 2025 reflects a reassessment of ITC’s growth prospects and risk profile. The market cap grade of 1 further indicates limited upside potential relative to risk, reinforcing the bearish sentiment captured in the options market.
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Investor Implications and Outlook
For investors holding ITC Ltd., the surge in put option activity and the stock’s technical and fundamental challenges suggest heightened caution is warranted. The persistent downtrend and negative mojo grade downgrade imply that downside risks remain elevated in the near term. Investors may consider hedging strategies or reassessing their exposure in light of these developments.
Conversely, traders with a bearish outlook might view the active put option market as an opportunity to capitalise on expected declines, particularly with the January expiry approaching. However, given ITC’s large-cap status and liquidity, any sharp moves could attract quick reversals, necessitating vigilant risk management.
Overall, the options market is signalling a clear tilt towards bearish positioning and hedging, reflecting broader investor concerns about ITC’s near-term prospects amid sectoral and market headwinds.
Summary
ITC Ltd.’s recent put option surge at the ₹340 strike for the 27 January expiry highlights growing bearish sentiment and hedging activity. The stock’s proximity to its 52-week low, coupled with a seven-day losing streak and technical weakness, has prompted investors to seek downside protection. The downgrade to a Sell mojo grade and underperformance relative to sector and Sensex benchmarks further reinforce cautious positioning. As expiry approaches, market participants will closely monitor whether this bearish momentum sustains or if a reversal emerges.
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