Intense Put Option Trading Highlights Bearish Sentiment
Data from the options market reveals that ITC Ltd’s put options have been the most actively traded contracts in recent sessions, with significant volumes concentrated around strike prices close to the current underlying value of ₹291.35. The expiry date of 25 August 2026 has attracted the bulk of this activity, with five key strike prices drawing substantial interest.
The strike price of ₹290.0 saw the highest number of contracts traded at 6,266, generating a turnover of approximately ₹469.10 lakhs and an open interest of 4,027 contracts. This is closely followed by the ₹285.0 strike, which recorded 5,777 contracts traded with a turnover of ₹301.95 lakhs and an open interest of 2,681. Other notable strikes include ₹275.0 (3,507 contracts), ₹270.0 (3,411 contracts), and ₹287.5 (3,132 contracts), cumulatively indicating a strong preference for put options slightly below or near the current market price.
Expiry Patterns and Open Interest Suggest Strategic Hedging
The concentration of open interest at these strike prices suggests that market participants are positioning themselves for potential downside risk or are actively hedging existing long exposures. The clustering of activity around the ₹270 to ₹290 range indicates a market expectation that ITC’s share price could test these levels in the near term, with the 25 August expiry serving as a critical juncture for option holders.
Open interest figures reinforce this view, with the highest open interest at ₹275.0 strike standing at 3,088 contracts, followed by ₹270.0 at 2,229 contracts. This accumulation of open interest at lower strikes relative to the current price points to a cautious or bearish outlook among traders, possibly reflecting concerns over the stock’s ability to sustain recent gains.
Stock Performance and Sector Context
ITC Ltd’s recent price action has been mixed. The stock closed at ₹291.35, hovering just 2.14% above its 52-week low of ₹275, signalling vulnerability near key support levels. Despite a modest gain of 3.63% on the day, ITC underperformed its sector, which advanced by 3.58%, and lagged behind the broader Sensex gain of 0.69% on the same day.
Technical indicators paint a cautious picture. ITC is trading below all major moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — underscoring a prevailing downtrend. The weighted average price of traded volumes has skewed towards the lower end of the day’s range, suggesting selling pressure and a lack of conviction among buyers at higher levels.
Mojo Grade Downgrade Reflects Deteriorating Fundamentals
Adding to the bearish sentiment, ITC’s mojo grade was downgraded from Hold to Sell on 28 July 2026, with a current mojo score of 45.0. This downgrade reflects a reassessment of the company’s fundamentals and near-term outlook, signalling caution to investors. Despite being a large-cap stock with a market capitalisation of ₹3,53,770 crores, the downgrade highlights concerns over growth prospects and sector headwinds.
Investor Participation and Liquidity Considerations
Investor participation has also shown signs of waning enthusiasm. Delivery volumes on 31 July stood at 95.36 lakh shares, down 18.71% against the five-day average, indicating reduced conviction among long-term holders. However, liquidity remains adequate, with the stock’s traded value supporting sizeable trade sizes up to ₹10.65 crores, ensuring that option market activity is backed by sufficient underlying liquidity.
Dividend Yield Provides Some Cushion
One positive for investors is ITC’s attractive dividend yield of 5.08% at current prices, which may provide some downside support amid volatility. This yield remains one of the highest in the FMCG sector, potentially attracting income-focused investors despite the prevailing bearish technical signals.
Implications for Investors and Traders
The pronounced put option activity at strikes near and below the current market price suggests that traders are either hedging existing long positions or speculating on a potential decline in ITC’s share price over the coming weeks. The expiry on 25 August 2026 will be a key event to watch, as option expiry dynamics could influence price volatility and directional bias.
For investors, the downgrade in mojo grade combined with technical weakness and heavy put option interest warrants a cautious approach. While the dividend yield offers some defensive appeal, the risk of further downside cannot be discounted given the current market positioning and sector underperformance.
Traders might consider monitoring open interest changes and volume spikes in put options as leading indicators of shifts in market sentiment. Additionally, the clustering of activity around the ₹275 to ₹290 strikes provides clear reference points for potential support and resistance levels in the near term.
Conclusion
ITC Ltd’s options market activity reveals a growing bearish stance among investors, with heavy put option volumes and open interest concentrated near key strike prices ahead of the August expiry. This, coupled with a recent downgrade and technical underperformance, signals caution for market participants. While the stock’s high dividend yield offers some respite, the prevailing sentiment suggests that downside risks remain elevated in the short term. Investors and traders alike should closely monitor developments in both the options and cash markets to navigate the evolving landscape effectively.
