ITC Ltd Sees Heavy Put Option Activity Amid Mixed Market Signals

Heavy Put Option Volume Highlights Investor Caution

On 6 February 2026, ITC Ltd. emerged as the most active stock in put options trading, with 5,348 contracts exchanged at the 310 strike price for the 24 February expiry. This volume translated into a turnover of approximately ₹29.86 crores, underscoring significant investor interest in downside protection or speculative bearish bets. The open interest at this strike stands at 1,374 contracts, indicating sustained positioning rather than transient trades.

The underlying stock price was ₹322.50 at the time, placing the 310 strike puts slightly out-of-the-money but within a range that suggests traders are preparing for a potential pullback of around 4% from current levels. This activity contrasts with the stock’s recent intraday high of ₹323.60, reached on the same day, reflecting a divergence between spot price strength and options market caution.

Price and Trend Analysis: Mixed Signals

ITC Ltd. has shown a mixed technical picture in recent sessions. After two consecutive days of decline, the stock rebounded with a 5.21% gain on 6 February, though it still underperformed its sector, which advanced 5.90%. The Cigarettes/Tobacco sector itself has been robust, gaining 5.78% on the day, suggesting that ITC’s relative underperformance may be a factor driving put buying as investors hedge against sector-specific or company-specific risks.

From a moving averages perspective, ITC’s current price sits above its 5-day moving average but remains below the 20-day, 50-day, 100-day, and 200-day averages. This positioning indicates a short-term recovery within a longer-term downtrend, which often prompts cautious investors to seek downside protection through put options.

Additionally, delivery volumes have declined sharply, with a 39.01% drop against the 5-day average, signalling reduced investor participation in the cash market. This diminished engagement may be contributing to the increased reliance on options for expressing market views or managing risk.

Fundamental Context and Market Capitalisation

ITC Ltd. is a large-cap FMCG company with a market capitalisation of ₹3,86,715 crores, operating primarily in the cigarettes and tobacco sector. The company currently holds a Mojo Score of 51.0, reflecting a Hold rating, which was upgraded from Sell on 4 February 2026. Despite this upgrade, the stock’s market cap grade remains at 1, indicating limited momentum from a valuation perspective.

Investors should note the stock’s attractive dividend yield of 4.19%, which provides a cushion amid price fluctuations. However, the recent surge in put option activity suggests that market participants are factoring in potential near-term headwinds, possibly linked to regulatory concerns, sector-specific challenges, or broader market volatility.

Expiry Patterns and Strike Price Concentration

The concentration of put option trades at the 310 strike price for the 24 February expiry is particularly telling. This strike is approximately 3.8% below the current underlying price, signalling a key support level where traders expect the stock could test or breach. The sizeable open interest at this strike further confirms that this level is a focal point for hedging or speculative strategies.

Options expiry dates often act as catalysts for price movement, and the upcoming 24 February expiry could see increased volatility as positions are squared off or rolled forward. Traders holding these puts may be anticipating a correction or using the options as insurance against a broader market downturn.

Bearish Positioning and Hedging Strategies

The heavy put option volume suggests a growing bearish sentiment or at least a cautious stance among investors. This could be driven by concerns over ITC’s earnings outlook, regulatory risks in the tobacco industry, or macroeconomic factors impacting consumer spending. The use of puts as a hedging tool is common among institutional investors seeking to protect long equity positions from downside risk.

Moreover, the weighted average price of traded options skewing towards the lower end of the price range indicates that buyers are keen to secure puts at more favourable premiums, enhancing the cost-effectiveness of their hedges. This behaviour often precedes periods of heightened uncertainty or expected price corrections.

Implications for Investors and Traders

For investors, the surge in put option activity at the 310 strike price ahead of the 24 February expiry serves as a cautionary signal. While ITC’s fundamentals remain solid with a large market cap and steady dividend yield, the options market is pricing in potential downside risks. This divergence between fundamental strength and options market sentiment warrants close monitoring.

Traders may view the current environment as an opportunity to capitalise on volatility, either by selling puts to collect premium if confident in a rebound or by buying puts to hedge existing long positions. The stock’s liquidity, with an average traded value of ₹17.27 crores based on 2% of the 5-day average, supports active trading strategies without excessive slippage.

Given the stock’s recent upgrade from Sell to Hold by MarketsMOJO on 4 February 2026, investors should weigh the technical signals from the options market alongside fundamental assessments. The Mojo Score of 51.0 and the Hold rating suggest a neutral stance, but the options activity indicates that market participants remain vigilant about downside risks.

Sector and Market Context

The Cigarettes/Tobacco sector’s strong performance on the day, gaining 5.78%, contrasts with ITC’s relative underperformance and heightened put activity. This divergence may reflect company-specific concerns or profit-taking after recent gains. Additionally, the broader Sensex was essentially flat, down 0.02%, highlighting that ITC’s options market dynamics are driven more by sector and stock-specific factors than by overall market trends.

Investors should also consider regulatory developments and macroeconomic factors that could impact consumer discretionary spending, which in turn affects FMCG companies like ITC. The combination of these elements is likely influencing the cautious positioning seen in the options market.

Conclusion

In summary, ITC Ltd.’s options market activity reveals a pronounced increase in put option trading at the 310 strike price for the upcoming 24 February expiry, signalling investor caution and potential bearish positioning. Despite a recent upgrade to Hold and a solid dividend yield, the stock’s technical indicators and reduced delivery volumes suggest a cautious near-term outlook.

Investors and traders should closely monitor the evolving options open interest and price action as expiry approaches, balancing fundamental strengths against the market’s hedging behaviour. The interplay between sector performance, regulatory risks, and macroeconomic factors will be critical in shaping ITC’s trajectory in the weeks ahead.

Unlock special upgrade rates for a limited period. Start Saving Now →