ITC Ltd Sees Surge in Put Option Activity Amid Bearish Sentiment

Heavy Put Option Trading Highlights Bearish Sentiment

On 22 January 2026, ITC Ltd recorded an impressive 17,354 put option contracts traded at the ₹320 strike price, generating a turnover of approximately ₹549.77 lakhs. This level of activity is significant given the underlying stock price of ₹323.50, just marginally above the strike price, indicating that traders are positioning for a potential downside or seeking protection against further declines. Open interest for these puts stands at 3,551 contracts, reflecting sustained interest and commitment to bearish bets or hedging strategies.

Expiry Patterns and Market Implications

The expiry date of 27 January 2026 is just days away, intensifying the focus on these put options. The concentration of activity at the ₹320 strike suggests that traders view this level as a critical support zone. Should the stock breach this level decisively, it could trigger further downside pressure. Conversely, if ITC manages to hold above this strike, the put option premiums may decay rapidly, benefiting option sellers.

Technical and Fundamental Context

ITC Ltd recently hit a new 52-week low of ₹321.05, marking a fresh bottom in its price trajectory. Despite a slight rebound after two consecutive days of decline, the stock remains under pressure, trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a persistent downtrend. Investor participation has also waned, with delivery volumes on 21 January falling by 34.73% compared to the five-day average, suggesting reduced conviction among buyers.

From a broader market perspective, ITC’s one-day return of 0.09% marginally outperformed the FMCG sector’s 0.01% but lagged behind the Sensex’s 0.48% gain, highlighting relative weakness. The company’s Market Capitalisation Grade remains at 1, reflecting its status as a large-cap stock with a market cap of ₹4,10,708 crores. However, the Mojo Score of 48.0 and a recent downgrade from Hold to Sell on 29 December 2025 indicate deteriorating fundamentals and a cautious outlook from analysts.

Investor Strategies: Hedging and Bearish Positioning

The surge in put option volumes at the ₹320 strike price suggests that market participants are either hedging existing long positions or outright speculating on a decline in ITC’s share price. Given the stock’s recent technical weakness and the downgrade in its Mojo Grade, investors may be seeking downside protection amid uncertainty in the FMCG sector.

Put options serve as an effective tool for risk management, allowing holders to limit losses if the stock price falls below the strike price. The elevated open interest and turnover in these contracts indicate that a sizeable portion of the market is bracing for potential volatility or a correction in ITC’s shares.

Liquidity and Trading Dynamics

ITC remains sufficiently liquid, with a trading capacity of approximately ₹13.13 crores based on 2% of its five-day average traded value. This liquidity supports active options trading and allows institutional and retail investors to execute sizeable trades without significant market impact. However, the falling delivery volumes and subdued investor participation highlight a cautious stance, possibly reflecting concerns over the company’s near-term prospects.

Comparative Sector and Market Performance

While ITC’s stock price has been under pressure, the FMCG sector has shown relative stability, with a modest one-day return of 0.01%. The broader Sensex index outperformed both, gaining 0.48% on the same day. This divergence emphasises ITC’s current underperformance within its sector and the wider market, reinforcing the bearish sentiment reflected in options trading.

Outlook and Investor Considerations

Given the current technical setup and the surge in put option activity, investors should approach ITC Ltd with caution. The downgrade to a Sell rating and the Mojo Score below 50 reflect underlying challenges in the company’s fundamentals and market sentiment. While the stock’s large-cap status and sector leadership provide some stability, the bearish positioning in options markets suggests that downside risks remain elevated in the near term.

Investors holding long positions may consider protective strategies such as buying puts or tightening stop-loss levels to mitigate potential losses. Conversely, traders with a bearish outlook might find opportunities in the elevated put premiums and the stock’s vulnerability to further declines.

Monitoring the stock’s price action around the ₹320 strike and the expiry on 27 January will be crucial in gauging the next directional move. A decisive break below this level could accelerate selling pressure, while a rebound above key moving averages might alleviate some bearish concerns.

Summary

ITC Ltd’s recent surge in put option trading at the ₹320 strike price ahead of the 27 January expiry highlights a growing bearish sentiment and hedging activity among investors. The stock’s technical weakness, downgrade in analyst ratings, and subdued investor participation reinforce the cautious outlook. While liquidity remains adequate for active trading, the market appears to be pricing in near-term risks for this large-cap FMCG player. Investors should weigh these factors carefully and consider appropriate risk management strategies in the current environment.

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