Larsen & Toubro Ltd Sees Surge in Call Option Activity Ahead of February Expiry

Robust Call Option Activity Highlights Investor Optimism

The most active call options for Larsen & Toubro Ltd. are concentrated around strike prices of ₹3,900, ₹4,000, and ₹4,100, all expiring on 24 February 2026. The underlying stock currently trades at ₹3,886, indicating that investors are betting on a price appreciation beyond these levels within the next month.

Specifically, the 3,900 strike call options saw the highest number of contracts traded at 10,491, generating a turnover of approximately ₹2,079.55 lakhs. Open interest for this strike stands at 2,747 contracts, reflecting sustained interest and potential accumulation.

The 4,000 strike call options also attracted significant activity with 10,418 contracts traded and a turnover of ₹1,209.84 lakhs. Open interest here is even higher at 4,658 contracts, suggesting that many investors are positioning for a breakout above this psychologically important level.

Meanwhile, the 4,100 strike calls recorded 3,866 contracts traded, with a turnover of ₹244.98 lakhs and open interest of 1,898 contracts. This indicates a more aggressive bullish stance, as these strike prices are further out-of-the-money relative to the current stock price.

Technical and Fundamental Backdrop Supports Bullish Positioning

Larsen & Toubro Ltd. has outperformed its construction sector peers by 1.5% on the day, with a 1-day return of 2.70% compared to the sector’s 1.21%. The stock has been on a three-day winning streak, delivering a cumulative return of 4.45% during this period. Intraday, it touched a high of ₹3,932.60, marking a 3.65% gain from the previous close.

From a technical perspective, the stock is trading above its 5-day, 100-day, and 200-day moving averages, signalling a strong medium- to long-term uptrend. However, it remains slightly below its 20-day and 50-day moving averages, suggesting some near-term resistance that traders will be watching closely.

Investor participation is also on the rise, with delivery volumes reaching 13.94 lakh shares on 28 January, a 5.15% increase over the five-day average. This heightened liquidity supports the active options market and provides a solid foundation for price discovery.

Mojo Score Upgrade Reflects Improving Fundamentals

MarketsMOJO’s proprietary scoring system has upgraded Larsen & Toubro Ltd. from a Hold to a Buy rating as of 8 January 2026, reflecting improved financial metrics and positive trend assessments. The company holds a Mojo Score of 71.0, indicating strong quality and growth prospects. Its market capitalisation stands at a substantial ₹5,21,847 crores, categorising it firmly as a large-cap stock with a Market Cap Grade of 1.

This upgrade aligns with the bullish positioning seen in the options market, where investors appear confident in the company’s ability to capitalise on infrastructure growth and government spending in the construction sector.

Despite the recent gains, the stock’s valuation remains reasonable relative to its peers, supported by solid order book growth and improving margin profiles. These factors contribute to the positive sentiment and increased call option activity.

Expiry Patterns and Strike Price Concentration Suggest Strategic Positioning

The concentration of call option trades around the ₹3,900 and ₹4,000 strikes, both close to the current market price, indicates that traders are positioning for a near-term rally. The February expiry date provides a limited timeframe, suggesting that investors expect catalysts or positive developments within the next four weeks.

Open interest data corroborates this view, with the highest open interest at the ₹4,000 strike, signalling that many market participants are holding onto bullish bets rather than closing positions. This could imply expectations of a breakout above this level, potentially driven by upcoming earnings, contract wins, or macroeconomic factors favouring infrastructure spending.

Balancing Risks and Rewards in a Volatile Sector

While the bullish call option activity and positive technical signals are encouraging, investors should remain mindful of sector-specific risks. The construction industry is sensitive to regulatory changes, raw material price fluctuations, and execution challenges. Any adverse developments could temper the current optimism.

Moreover, the stock’s position below the 20-day and 50-day moving averages suggests that short-term resistance levels may cap gains temporarily. Traders should watch for confirmation of a sustained breakout above these averages to validate the bullish thesis.

Nevertheless, the rising delivery volumes and strong open interest in call options indicate that market participants are increasingly confident in Larsen & Toubro’s near-term prospects, making it a stock to watch closely in the coming weeks.

Conclusion: A Bullish Outlook Supported by Market Dynamics

Larsen & Toubro Ltd.’s recent surge in call option trading, combined with its upgraded Mojo Grade and solid technical performance, underscores a growing bullish consensus among investors. The concentration of activity around the ₹4,000 strike price and the February expiry suggests expectations of meaningful price appreciation in the short term.

As the stock continues to outperform its sector and attract rising investor participation, it remains well-positioned to benefit from infrastructure growth and government initiatives. However, cautious monitoring of resistance levels and sector risks is advisable to navigate potential volatility.

Overall, Larsen & Toubro Ltd. presents a compelling opportunity for investors seeking exposure to a large-cap construction leader with improving fundamentals and positive market sentiment.

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