ITC Ltd Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

The most active put options for ITC Ltd. are concentrated at the ₹330 strike price, with 2,932 contracts traded on 18 February 2026. This activity generated a turnover of approximately ₹12.53 crores, underscoring significant investor interest in downside protection or speculative bearish bets. Open interest remains elevated at 2,715 contracts, indicating sustained positioning rather than short-term speculative spikes.

ITC’s underlying stock price hovered near ₹329.65 on the day, just below the ₹330 strike, which is a critical psychological and technical level. The proximity of the strike price to the current market value suggests that traders are positioning for a potential decline or increased volatility as the expiry date approaches.

Stock Performance and Technical Context

On 19 February 2026, ITC’s stock price declined by 0.74%, underperforming the FMCG sector’s 0.40% drop and the broader Sensex’s marginal 0.13% fall. This marks a reversal after three consecutive days of gains, signalling a possible short-term correction or profit-taking phase.

Technically, the stock trades above its 5-day and 20-day moving averages but remains below its longer-term 50-day, 100-day, and 200-day averages. This mixed moving average alignment suggests that while short-term momentum has been positive, the medium to long-term trend remains subdued, reinforcing cautious investor sentiment.

Investor participation has risen notably, with delivery volumes reaching 2.08 crore shares on 18 February, a 63.9% increase compared to the five-day average. This heightened activity indicates growing interest and possibly increased hedging or repositioning ahead of the expiry.

Fundamental and Market Positioning

ITC Ltd. is classified as a large-cap stock with a market capitalisation of ₹4,16,597 crores, operating within the FMCG sector. Despite its size and sector prominence, the company’s Mojo Score stands at 48.0, with a recent downgrade from Hold to Sell on 9 February 2026. This downgrade reflects deteriorating quality grades and a cautious outlook from analysts, which may be influencing the increased put option activity.

The stock’s market cap grade is rated 1, indicating relatively lower quality or growth prospects compared to peers. This rating, combined with the recent negative price movement and technical signals, may be prompting investors to hedge downside risk or speculate on further declines through put options.

Investor Sentiment and Hedging Implications

The pronounced put option activity at the ₹330 strike price ahead of the 24 February expiry suggests that investors are either hedging existing long positions or speculating on a near-term decline. The open interest level of 2,715 contracts supports the view that this is not merely a transient trading phenomenon but a more deliberate positioning strategy.

Given the stock’s recent price weakness and downgrade in Mojo Grade, market participants appear to be bracing for potential volatility or downside risk. The put options provide a cost-effective way to protect portfolios or capitalise on bearish expectations without outright short selling.

Liquidity remains robust, with the stock’s traded value supporting sizeable trade sizes up to ₹15.34 crores based on 2% of the five-day average traded value. This liquidity facilitates active options trading and allows institutional and retail investors to implement complex hedging or speculative strategies efficiently.

Comparative Sector and Market Context

While ITC’s one-day return of -0.74% underperformed the FMCG sector’s -0.40% and the Sensex’s -0.13%, the stock’s mixed technical signals and recent downgrade highlight a divergence from broader sector trends. This divergence may be attracting put buyers seeking to hedge against company-specific risks or sector rotation pressures.

Investors should also note that the FMCG sector generally exhibits defensive characteristics, but ITC’s current positioning and market sentiment suggest a more cautious stance is warranted. The elevated put option interest could be an early indicator of shifting market dynamics or profit-taking in a stock that has seen recent gains.

Outlook and Investor Considerations

As ITC Ltd. approaches the 24 February 2026 options expiry, investors should closely monitor price action around the ₹330 level, which is pivotal given the concentration of put option interest. A sustained break below this level could trigger further downside momentum, validating the bearish positioning observed in the options market.

Conversely, a rebound above short-term moving averages could alleviate some bearish pressure, but the longer-term technicals and recent downgrade suggest that caution remains prudent. Investors holding long positions may consider protective strategies such as buying puts or employing collars to mitigate risk.

For traders, the liquidity and active options market provide opportunities to capitalise on volatility through spreads or directional bets. However, the current sentiment and technical backdrop imply that downside risks are elevated in the near term.

Overall, the surge in put option activity at ITC Ltd. reflects a market environment where investors are increasingly hedging or speculating on potential weakness, underscoring the importance of disciplined risk management and thorough analysis in portfolio decisions.

Summary

ITC Ltd.’s recent downgrade to a Sell rating, combined with its mixed technical signals and increased put option trading at the ₹330 strike price, highlights a cautious market stance. The stock’s underperformance relative to its sector and the broader market, alongside rising delivery volumes, suggests growing investor concern. The options market activity serves as a barometer of sentiment, signalling that downside risks are being actively managed or anticipated by market participants.

Investors should weigh these factors carefully, considering both fundamental and technical indicators, before making allocation decisions in ITC Ltd. or the FMCG sector at large.

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