ITC Ltd Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Surge Reflects Growing Bearish Positioning

On 9 February 2026, ITC Ltd. (NSE: ITC) recorded the most active put options volume among FMCG stocks, with 2,329 contracts changing hands at the ₹320 strike price expiring on 24 February 2026. The turnover for these put options reached ₹119.6 lakhs, underscoring robust trading interest. The underlying stock price stood at ₹324.1, just above the strike price, suggesting that traders are either hedging against a near-term decline or speculating on a pullback below this level.

Open interest in these puts remains elevated at 2,199 contracts, signalling that the bearish bets are not merely speculative but are being held over time. This level of open interest, combined with the high volume, points to a sustained interest in downside protection or bearish positioning as the expiry date approaches.

Stock Performance and Technical Context

ITC’s stock price declined by 0.66% on the day, slightly underperforming the FMCG sector’s 0.25% fall but lagging behind the Sensex’s modest 0.40% gain. The stock’s moving averages present a mixed technical picture: it trades above its 5-day moving average but remains below its 20-day, 50-day, 100-day, and 200-day averages. This suggests short-term resilience but longer-term pressure, which may be contributing to the cautious sentiment reflected in options trading.

Investor participation has notably increased, with delivery volumes on 6 February reaching 3.56 crore shares, a 115.41% rise compared to the five-day average. This heightened activity indicates that investors are actively repositioning their holdings, possibly in response to recent market volatility or company-specific developments.

Dividend Yield and Liquidity Considerations

ITC continues to offer an attractive dividend yield of 3.98% at current prices, which may provide some support to the stock amid bearish option positioning. The company’s large market capitalisation of ₹4,08,516 crore and liquidity profile, with an average traded value sufficient to accommodate trades up to ₹22.78 crore, make it a preferred choice for institutional investors and traders alike.

Mojo Score Upgrade and Market Sentiment

ITC’s MarketsMOJO score currently stands at 51.0, reflecting a Hold rating, an improvement from a previous Sell grade assigned on 4 February 2026. This upgrade suggests a stabilisation in fundamentals or valuation, though the score remains moderate, indicating limited upside potential in the near term. The market cap grade is 1, denoting its status as a large-cap stock with significant institutional interest.

Despite the upgrade, the heavy put option activity signals that traders remain cautious. The ₹320 strike price is a psychologically important level, just below the current market price, and the concentration of open interest here may act as a support or resistance zone depending on price action in the coming weeks.

Expiry Patterns and Implications for Investors

The 24 February 2026 expiry is shaping up as a critical juncture for ITC. The concentration of put options at ₹320 suggests that investors are bracing for potential volatility or a correction. Such positioning can also be interpreted as a hedging strategy by long-term holders seeking to protect gains or limit downside risk amid uncertain macroeconomic conditions and sectoral pressures.

Given the stock’s current technical setup and the broader FMCG sector’s performance, investors should monitor price movements closely around this strike price and expiry date. A breach below ₹320 could trigger further downside, while a rebound above this level may alleviate bearish pressures and reduce put option premiums.

Balancing Dividend Appeal with Hedging Activity

While ITC’s dividend yield of nearly 4% remains attractive in a low-yield environment, the surge in put option activity highlights a divergence between income-focused investors and traders seeking downside protection. This dichotomy is common in large-cap stocks with stable cash flows but uncertain near-term catalysts.

Investors should weigh the benefits of steady dividends against the risks implied by options market sentiment. The current scenario suggests a cautious approach, with potential for short-term volatility but a resilient underlying business model.

Outlook and Strategic Considerations

Looking ahead, ITC’s stock price trajectory will likely be influenced by sectoral trends in FMCG, regulatory developments, and broader market dynamics. The put option activity ahead of the February expiry serves as a barometer of market expectations, signalling that traders are preparing for possible downside or increased volatility.

For portfolio managers and retail investors, this environment calls for prudent risk management. Employing hedging strategies or selectively trimming exposure could be advisable until clearer directional cues emerge post-expiry.

Conclusion

In summary, ITC Ltd.’s heavy put option trading at the ₹320 strike price ahead of the 24 February 2026 expiry underscores a cautious market stance. Despite a recent upgrade to a Hold rating and a solid dividend yield, the options market reveals underlying concerns about near-term price weakness. Investors should monitor price action closely and consider hedging or diversification strategies to navigate the evolving risk landscape.

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