ITC Ltd Sees Heavy Put Option Activity Amid Bearish Sentiment

Heavy Put Option Volumes Highlight Investor Caution

On 6 January 2026, ITC Ltd. recorded significant activity in put options expiring on 27 January 2026. The most actively traded strike prices were ₹340 and ₹350, with 9,168 and 9,411 contracts traded respectively. The turnover for the ₹350 strike put options was particularly notable at ₹1,111.25 lakhs, nearly double the ₹522.21 lakhs turnover seen at the ₹340 strike. Open interest figures further underscore this trend, with 11,772 contracts outstanding at the ₹350 strike and 7,826 at ₹340, indicating sustained investor interest in downside protection or speculative bearish bets.

These strike prices are closely aligned with the current underlying value of ₹344.25, suggesting that traders are focusing on near-the-money puts to capitalise on or hedge against potential declines. The concentration of activity around these strikes and the January expiry date points to a tactical positioning ahead of the month-end, possibly reflecting concerns over upcoming corporate announcements or broader market volatility.

Stock Performance Mirrors Bearish Positioning

ITC’s recent price action corroborates the put option activity. The stock has declined by 1.63% on the day, underperforming the Sensex which fell 0.32%. Over the past four trading sessions, ITC has lost 14.62%, a steep fall that has dragged the share price to a fresh 52-week low of ₹343.30. This decline is in line with the FMCG sector’s 1.81% drop on the day, but ITC’s underperformance is more pronounced.

Technically, ITC is trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling a sustained downtrend. The stock’s delivery volume on 5 January was 3.07 crore shares, a sharp 45.05% drop compared to its five-day average, indicating waning investor participation amid the sell-off. Despite this, liquidity remains adequate, with the stock’s traded value supporting sizeable transactions up to ₹72.84 crore, ensuring that active traders can enter or exit positions without significant price impact.

Mojo Score and Analyst Ratings Reflect Negative Outlook

ITC Ltd. currently holds a Mojo Score of 48.0, placing it in the 'Sell' category. This represents a downgrade from its previous 'Hold' rating as of 29 December 2025. The downgrade reflects deteriorating fundamentals and technical weakness, as well as the bearish market sentiment evident in options trading. The company’s market cap grade is 1, indicating its status as a large-cap stock with a market capitalisation of ₹4,36,070 crore, but this scale has not insulated it from recent selling pressure.

Investors should note that the downgrade and bearish positioning in options markets may be signalling caution ahead of the company’s near-term prospects. The FMCG sector, while generally defensive, is currently under pressure, and ITC’s relative underperformance suggests it is not immune to sector-wide headwinds.

Expiry Patterns and Implications for January 2026

The concentration of put option activity around the 27 January 2026 expiry is significant. This expiry date is the last for January contracts, and the heavy open interest at the ₹350 and ₹340 strikes suggests that traders are either hedging existing long positions or speculating on further downside before the month closes. The high turnover and open interest levels imply that these positions are not merely short-term trades but potentially part of a broader strategic stance.

Given the stock’s current trading below all major moving averages and the recent four-day losing streak, the market consensus appears to be skewed towards a bearish outlook in the near term. Investors holding ITC shares may consider protective strategies, including put options, to mitigate downside risk.

Investor Takeaways and Strategic Considerations

For investors and traders, the surge in put option volumes at near-the-money strikes for ITC Ltd. is a clear signal of caution. The stock’s technical weakness, combined with a downgrade in analyst ratings and falling investor participation, suggests that downside risks remain elevated in the short term.

Those holding long positions in ITC may consider utilising put options as a hedge against further declines, particularly given the liquidity and active market in these contracts. Conversely, speculative traders might view the elevated open interest and turnover as an opportunity to capitalise on potential volatility around the January expiry.

It is also prudent to monitor sectoral trends within FMCG and broader market movements, as ITC’s performance is closely tied to consumer sentiment and macroeconomic factors. The stock’s relative underperformance compared to the Sensex and sector peers may prompt investors to reassess portfolio allocations.

Conclusion

ITC Ltd.’s recent put option activity, combined with its technical and fundamental challenges, paints a picture of a stock under pressure. The heavy trading in January expiry puts at ₹340 and ₹350 strikes highlights investor concerns about near-term downside risk. While the company remains a large-cap stalwart in FMCG, current market dynamics and analyst downgrades suggest a cautious approach is warranted.

Investors should weigh the benefits of hedging strategies and remain vigilant to evolving market conditions as the January expiry approaches. The interplay of technical weakness, bearish options positioning, and sectoral headwinds will be critical in shaping ITC’s trajectory in the coming weeks.

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