Life Insurance Corporation of India Sees Surge in Call Option Activity Amid Bullish Momentum

Robust Call Option Activity Highlights Investor Sentiment

LICI's call options with strike prices of ₹880 and ₹900 have emerged as the most actively traded contracts in the insurance sector this week. Specifically, the ₹900 strike call option recorded 8,729 contracts traded, generating a turnover of ₹1,066.86 lakhs and an open interest of 2,395 contracts. Meanwhile, the ₹880 strike call option saw 7,869 contracts traded, with a turnover of ₹1,422.79 lakhs and an open interest of 727 contracts. These figures underscore a strong speculative interest in the stock's upward potential over the near term.

The underlying stock price currently stands at ₹894.90, positioning the ₹900 strike call option slightly out-of-the-money but within reach if the bullish momentum sustains. The concentration of open interest at this strike price suggests traders are anticipating a rally beyond this level by the February expiry.

Stock Performance Outpaces Sector and Sensex

On 6 February 2026, LICI outperformed its insurance sector peers by 6.29%, while the sector itself declined by 0.20% and the Sensex fell 0.41%. The stock has recorded consecutive gains over the past two sessions, delivering a cumulative return of 6.57%. Intraday, LICI touched a high of ₹892, marking a 6.22% increase from the previous close.

Technical indicators reinforce this positive trend, with the stock trading above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. This broad-based technical strength suggests sustained buying interest and a favourable medium to long-term outlook.

Liquidity and Volume Dynamics

Despite the strong price gains, investor participation has shown signs of moderation. Delivery volume on 5 February was 2.74 lakh shares, representing a 50.01% decline compared to the five-day average delivery volume. This drop may indicate that short-term traders are locking in profits or that fresh buying is being driven more by derivatives activity than outright stock purchases.

Nevertheless, liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting transactions up to ₹1.93 crore based on 2% of the five-day average traded value. This ensures that institutional and retail investors can execute orders without significant market impact.

Mojo Score Downgrade Reflects Caution Despite Price Strength

LICI’s current Mojo Score stands at 40.0, categorised as a Sell rating, a downgrade from its previous Hold grade as of 7 January 2026. The downgrade reflects concerns over valuation and underlying fundamentals despite the recent price rally. The company’s Market Cap Grade remains at 1, indicating its status as a large-cap stock with a market capitalisation of ₹5,31,584 crore.

This divergence between technical strength and fundamental caution suggests that while traders are positioning for short-term gains, longer-term investors may be wary of potential headwinds in the insurance sector or company-specific challenges.

Expiry Patterns and Strike Price Concentration

The February 24 expiry has attracted significant open interest accumulation, particularly at the ₹900 strike price, which is currently the focal point for bullish bets. The open interest of 2,395 contracts at this strike is more than triple that of the ₹880 strike, indicating a strong consensus around this price level as a key resistance point to be breached.

Such concentration often precedes heightened volatility as expiry approaches, with traders either exercising options or unwinding positions depending on the stock’s movement. The high turnover in these call options also points to active hedging and speculative strategies being employed by market participants.

Implications for Investors and Traders

For investors, the current scenario presents a mixed picture. The technical momentum and call option activity suggest potential upside in the near term, supported by strong market participation in derivatives. However, the fundamental downgrade and falling delivery volumes warrant caution, signalling that gains may be driven more by speculative interest than by robust underlying business performance.

Traders focusing on options may find opportunities in the elevated open interest and liquidity, particularly around the ₹900 strike price. Those with a bullish outlook could consider call options to leverage potential upside, while more conservative investors might monitor the stock for confirmation of sustained strength before increasing exposure.

Sector Context and Market Outlook

The insurance sector has faced mixed fortunes recently, with regulatory changes and evolving market dynamics impacting valuations. LICI, as the sector’s largest player, often sets the tone for investor sentiment. Its recent outperformance relative to the sector and Sensex is notable, but the downgrade in Mojo Grade highlights the need for investors to balance optimism with prudence.

Looking ahead, the expiry of February options will be a critical juncture. Should LICI breach the ₹900 strike decisively, it could trigger further bullish momentum and attract additional call buying. Conversely, failure to sustain gains may lead to profit-taking and a reversion to more cautious trading patterns.

Conclusion

Life Insurance Corporation of India’s recent surge in call option activity and stock price gains reflect a strong short-term bullish sentiment among traders. The concentration of open interest at the ₹900 strike price ahead of the 24 February expiry underscores expectations of further upside. However, the fundamental downgrade and declining delivery volumes suggest that investors should remain vigilant and consider the broader market context before committing significant capital.

For those engaged in derivatives trading, the current environment offers opportunities to capitalise on volatility and directional bets. Meanwhile, long-term investors may prefer to monitor developments closely, balancing technical signals with fundamental assessments to navigate the evolving landscape of India’s insurance sector.

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