ITC Ltd. Sees Robust Call Option Activity Ahead of January Expiry

Overview of Call Option Activity

The most active call options for ITC Ltd. are concentrated around strike prices ranging from ₹350 to ₹390, with the underlying stock currently trading at ₹351.90. The January 27 expiry has attracted the bulk of open interest and turnover, indicating a focus on short-term directional bets.

Notably, the ₹350 strike call options recorded the highest number of contracts traded at 8,977, generating a turnover of ₹1236.67 lakhs and an open interest of 12,759 contracts. This strike is slightly in-the-money given the current stock price, suggesting traders are positioning for a modest upside or hedging existing holdings.

Close behind, the ₹380 strike call options saw 8,947 contracts traded with a turnover of ₹178.94 lakhs and an open interest of 20,377 contracts. This strike is out-of-the-money by approximately 8.1%, indicating speculative bullish bets on a potential rally in the coming weeks.

The ₹360 strike calls led in turnover with ₹577.78 lakhs on 8,398 contracts traded, supported by an open interest of 15,418. Meanwhile, the ₹370 and ₹390 strikes also attracted substantial activity, with 6,243 and 7,316 contracts traded respectively, underscoring a broad range of bullish positioning across near-the-money and out-of-the-money strikes.

Expiry and Open Interest Patterns

All the highlighted call options share the same expiry date of 27 January 2026, which is less than a month away from the news generation date of 5 January 2026. This compressed timeframe suggests traders are focusing on near-term catalysts or technical triggers that could drive price movement.

Open interest figures are particularly telling. The ₹380 strike's open interest of 20,377 contracts is the highest among the strikes, closely followed by the ₹350 strike at 12,759 and ₹360 strike at 15,418. Such elevated open interest at out-of-the-money strikes typically signals speculative bullish sentiment or hedging strategies by institutional investors anticipating a price rise beyond current levels.

Stock Performance and Technical Context

Despite the bullish call option activity, ITC Ltd.'s stock performance remains subdued. The share price closed just 1.81% above its 52-week low of ₹345.25, reflecting a period of weakness. The stock underperformed its FMCG sector peers by 0.37% on the day, with a modest gain of 0.59% compared to the sector's 0.67% rise and the Sensex's slight decline of 0.15%.

Technically, ITC is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — indicating a bearish trend. However, the stock has shown signs of a short-term trend reversal, gaining after two consecutive days of decline. Rising investor participation is evident from a delivery volume of 5.6 crore shares on 2 January, which is 23.66% higher than the five-day average, signalling renewed interest at current price levels.

Fundamental Assessment and Mojo Grade Downgrade

ITC Ltd. holds a large-cap market capitalisation of ₹4,41,144.67 crores, underscoring its prominence in the FMCG sector. However, its recent Mojo Score of 48.0 and a downgrade from Hold to Sell on 29 December 2025 reflect deteriorating fundamentals or valuation concerns as assessed by MarketsMOJO.

The Market Cap Grade of 1 further indicates limited upside potential relative to peers, which may explain the cautious stance among some investors despite the active call option interest. This dichotomy between technical option activity and fundamental caution highlights the nuanced market view on ITC's near-term prospects.

Investor Sentiment and Market Implications

The heavy call option volumes at strikes above the current price suggest that a segment of the market is positioning for a rebound in ITC Ltd. shares. The concentration of open interest at ₹380 and ₹390 strikes, which are 8.1% and 11% out-of-the-money respectively, implies expectations of a meaningful price rally within the next three weeks.

However, the stock’s technical weakness and fundamental downgrade temper this optimism. The divergence between option market bullishness and underlying stock weakness may indicate speculative trading or hedging activity rather than broad-based conviction.

Moreover, the turnover figures reveal that the ₹350 strike call options dominate in terms of value traded, suggesting that many investors prefer a more conservative bullish stance close to the money. This could reflect a strategy to capitalise on moderate upside while limiting premium expenditure.

Sector and Market Context

Within the FMCG sector, ITC Ltd. has underperformed slightly on the day, with a 0.61% gain lagging the sector’s 0.67% rise. The Sensex’s marginal decline of 0.15% contrasts with ITC’s modest recovery, highlighting stock-specific factors influencing investor behaviour.

Given ITC’s large-cap status and significant market presence, its option market activity often serves as a barometer for broader FMCG sector sentiment. The current pattern of call option interest may reflect anticipation of sectoral tailwinds or company-specific developments expected in the near term.

Conclusion: Navigating Mixed Signals

ITC Ltd.’s active call option market ahead of the January expiry reveals a nuanced investor outlook. While the surge in call contracts at multiple strike prices signals bullish speculation or hedging, the underlying stock’s technical weakness and fundamental downgrade suggest caution.

Investors should weigh the potential for a short-term rebound against the broader challenges facing the company and sector. The elevated open interest at out-of-the-money strikes may offer opportunities for tactical trades, but the overall Sell Mojo Grade and subdued price action counsel prudence.

As always, monitoring evolving option market trends alongside fundamental updates will be crucial for informed decision-making in ITC Ltd. shares.

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