ITC Ltd Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Surge Reflects Bearish Sentiment

On 27 January 2026, ITC Ltd. emerged as the most active stock in put options trading, with 3,340 contracts changing hands at the 325 strike price for the 24 February expiry. This activity generated a turnover of ₹525.32 lakhs, underscoring substantial investor interest in downside protection. Open interest remains elevated at 3,236 contracts, indicating that traders are maintaining or building bearish positions rather than merely closing out existing ones.

The underlying stock price closed at ₹322.90, just 0.6% above its 52-week low of ₹321.05, reinforcing the cautious stance among market participants. The strike price of 325 is slightly out-of-the-money, suggesting that investors are positioning for a potential decline below this level in the near term.

Price and Volume Trends Signal Weakness

ITC’s recent price action has been subdued, with the stock falling by 0.57% over the past two trading sessions. This decline aligns with the broader FMCG sector’s performance, which saw a 0.34% drop on the same day, while the Sensex remained flat. Notably, ITC is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — a technical indication of sustained downward pressure.

Investor participation has also waned, as evidenced by a 36.51% drop in delivery volume to 79.04 lakh shares on 23 January compared to the five-day average. This decline in delivery volume suggests reduced conviction among buyers, potentially amplifying bearish sentiment.

Liquidity and Market Capitalisation Context

Despite the bearish undertones, ITC remains a highly liquid large-cap stock with a market capitalisation of ₹4,05,321 crores. The stock’s liquidity supports trade sizes up to ₹10.97 crores based on 2% of the five-day average traded value, facilitating active options and equity trading without significant market impact.

Mojo Score and Analyst Ratings Highlight Caution

ITC’s current Mojo Score stands at 48.0, reflecting a Sell rating, which was downgraded from Hold on 29 December 2025. This downgrade signals a deterioration in the company’s fundamental and technical outlook as assessed by MarketsMOJO’s proprietary scoring system. The market cap grade is 1, indicating a large-cap status but with limited upside potential in the near term.

Such a rating shift often influences investor behaviour, prompting increased hedging activity as seen in the options market. The combination of technical weakness, subdued volume, and a cautious analyst stance creates a challenging environment for bullish investors.

Expiry Patterns and Investor Positioning

The 24 February 2026 expiry date is attracting concentrated put option interest, which typically reflects hedging against further downside or outright bearish bets. The strike price of 325 is a critical level to watch, as a breach below this mark could trigger accelerated selling pressure and further option-related volatility.

Open interest data suggests that traders are not merely speculating but actively managing risk exposures. This is consistent with a market environment where uncertainty prevails, and investors seek to protect gains or limit losses amid broader sectoral and macroeconomic concerns.

Sectoral Comparison and Market Implications

Within the FMCG sector, ITC’s performance is inline but slightly weaker than peers, which have also faced pressure due to inflationary headwinds and shifting consumer demand patterns. The sector’s 0.34% decline on the day contrasts with the Sensex’s flat movement, highlighting sector-specific challenges.

Investors should monitor whether the put option activity in ITC is an isolated phenomenon or part of a broader trend of defensive positioning within FMCG stocks. Such insights can inform portfolio adjustments and risk management strategies.

Investor Takeaways and Outlook

For investors, the heavy put option activity in ITC Ltd. serves as a cautionary signal. The stock’s technical weakness, combined with a recent downgrade and falling delivery volumes, suggests that downside risks remain elevated. Those holding long positions may consider protective strategies such as buying puts or tightening stop-loss levels.

Conversely, traders with a bearish outlook might view the current option market dynamics as an opportunity to capitalise on potential declines, especially if the stock breaches the 325 strike price decisively. Monitoring open interest changes and expiry-related price action will be crucial in the coming weeks.

Overall, ITC’s current market behaviour exemplifies how options markets can provide early warnings of shifting investor sentiment and risk appetite, particularly in large-cap, liquid stocks within defensive sectors like FMCG.

Conclusion

ITC Ltd.’s pronounced put option activity ahead of the 24 February expiry highlights a growing bearish consensus and hedging demand among investors. With the stock hovering near its 52-week low and trading below all major moving averages, the technical and fundamental signals align to suggest caution. Market participants should closely watch the 325 strike price and open interest trends to gauge the evolving risk landscape and adjust their strategies accordingly.

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