ITC Ltd Sees Surge in Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights Growing Bearish Positioning

Data from the derivatives market reveals that ITC Ltd’s put options expiring on 27 January 2026 have attracted significant volumes, particularly at strike prices close to the current underlying value of ₹385.3. The most actively traded put contracts include strikes at ₹395, ₹387.5, ₹375, ₹370, and ₹360, cumulatively accounting for thousands of contracts and substantial turnover.

Specifically, the ₹395 strike put option saw 3,307 contracts traded, generating a turnover of approximately ₹380.44 lakhs and an open interest of 975 contracts. Similarly, the ₹387.5 strike recorded 3,421 contracts traded with a turnover of ₹322.40 lakhs and open interest of 667. The ₹375 and ₹370 strikes also saw robust activity with 2,130 and 2,304 contracts traded respectively, indicating a broad-based bearish positioning across strikes slightly above and below the current market price.

This surge in put option volumes and open interest suggests that market participants are either hedging existing long positions or speculating on further downside in ITC’s share price. The concentration of activity around strikes near the current price points to expectations of continued volatility and potential declines in the near term.

Stock Performance and Technical Context

ITC Ltd’s share price has been under pressure, hitting a fresh 52-week low of ₹385 on 1 January 2026. The stock declined by 4.57% on the day, marginally outperforming its sector which fell 5.33%, but lagging behind the broader Sensex which gained 0.15%. Intraday lows touched ₹385, reflecting persistent selling interest.

Technically, ITC is trading below all key moving averages including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a sustained downtrend. The Cigarettes/Tobacco sector, to which ITC belongs, has also experienced a sharp decline of 4.71%, compounding sector-specific headwinds.

Investor participation appears to be waning, with delivery volumes dropping by 45.53% compared to the five-day average, indicating reduced conviction among buyers. Despite this, liquidity remains adequate with a trade size capacity of ₹13.91 crores based on 2% of the five-day average traded value, allowing for sizeable transactions without significant price impact.

Fundamental Downgrade Adds to Negative Sentiment

Adding to the bearish outlook, ITC Ltd’s Mojo Score has deteriorated to 46.0, resulting in a downgrade from a Hold to a Sell rating as of 29 December 2025. The company’s market cap grade remains at 1, reflecting its large-cap status but signalling limited upside potential under current conditions.

This downgrade reflects concerns over ITC’s near-term earnings prospects and sectoral challenges, including regulatory pressures on tobacco products and shifting consumer preferences. The combination of fundamental weakness and technical deterioration has likely prompted investors to seek downside protection through put options.

Expiry Patterns and Investor Strategies

The expiry date of 27 January 2026 is attracting concentrated put option activity, suggesting that traders are positioning for potential price movements in the coming weeks. The clustering of open interest around strikes from ₹360 to ₹395 indicates a range within which investors expect the stock to fluctuate or decline.

Such patterns are typical when market participants anticipate volatility or seek to hedge against downside risk. The elevated turnover and open interest at these strikes imply that both speculative and hedging strategies are at play, with some investors possibly using puts as insurance against further losses in their underlying holdings.

Sectoral and Market Implications

ITC’s performance and option market activity should be viewed in the context of the broader FMCG sector and the Cigarettes/Tobacco industry. The sector’s 4.71% decline on the day underscores systemic pressures that may continue to weigh on ITC’s stock.

Meanwhile, the Sensex’s modest gain of 0.15% highlights the stock-specific and sector-specific nature of the weakness, rather than a broad market downturn. Investors should monitor how ITC navigates regulatory challenges and evolving consumer trends, which will be critical to its medium-term recovery prospects.

Investor Takeaway: Caution Advised Amid Bearish Signals

Given the confluence of technical weakness, fundamental downgrade, and pronounced put option activity, investors should exercise caution with ITC Ltd in the near term. The heavy put volumes and open interest at strikes near and above the current price suggest 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 find opportunities in the options market to capitalise on expected volatility and potential declines.

Monitoring upcoming quarterly results, regulatory developments, and sectoral trends will be essential to reassess ITC’s outlook and adjust investment strategies accordingly.

Summary of Key Metrics for ITC Ltd

Market Capitalisation: ₹5,04,917 crores (Large Cap)

Mojo Score: 46.0 (Sell, downgraded from Hold on 29 Dec 2025)

Current Price: ₹385.3 (New 52-week low)

Day Change: -5.89%

Sector Performance: Cigarettes/Tobacco down 4.71%

Sensex Performance: +0.15%

Delivery Volume: 77.48 lakhs (down 45.53% vs 5-day average)

Liquidity: Adequate for ₹13.91 crore trade size

Options Market Snapshot (Expiry 27 Jan 2026)

Strike ₹395: 3,307 contracts, ₹380.44 lakhs turnover, 975 open interest

Strike ₹387.5: 3,421 contracts, ₹322.40 lakhs turnover, 667 open interest

Strike ₹375: 2,130 contracts, ₹79.41 lakhs turnover, 845 open interest

Strike ₹370: 2,304 contracts, ₹58.98 lakhs turnover, 812 open interest

Strike ₹360: 1,933 contracts, ₹28.14 lakhs turnover, 696 open interest

Conclusion

ITC Ltd’s recent market behaviour and options activity reflect a cautious and bearish investor stance amid fundamental and technical headwinds. While the stock remains a large-cap stalwart in the FMCG sector, current signals advise prudence and active risk management. Investors should closely monitor developments and consider alternative opportunities where risk-reward profiles are more favourable.

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