Tata Consultancy Services Sees Heavy Call Option Activity Ahead of Expiry

Robust Call Option Volumes Highlight Investor Interest

The most active call options for TCS are concentrated at strike prices of ₹2,700 and ₹2,800, both expiring on 24 February 2026. The ₹2,700 strike saw 5,603 contracts traded, generating a turnover of approximately ₹172.96 lakhs, while the ₹2,800 strike recorded 5,074 contracts with a turnover of ₹13.50 lakhs. Open interest at these strikes stands at 3,253 and 7,057 contracts respectively, indicating sustained investor interest and potential accumulation ahead of expiry.

With the underlying stock price at ₹2,685, the ₹2,700 strike is slightly out-of-the-money, whereas the ₹2,800 strike is moderately out-of-the-money, suggesting that traders are positioning for an upside move in the near term. The heavy call option activity at these levels points to a bullish sentiment among options traders, who may be anticipating a recovery or positive catalysts in the coming weeks.

Stock Performance and Technical Context

Despite the bullish derivatives positioning, TCS’s spot price has been under pressure. The stock closed just 4.04% above its 52-week low of ₹2,585, reflecting a subdued performance relative to its historical range. Over the last two trading sessions, TCS has gained a modest 0.6%, marginally outperforming its sector by 0.44%, yet it remains below all major moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a bearish technical setup.

Investor participation has also waned, with delivery volumes on 20 February falling by 52.02% compared to the five-day average, indicating reduced conviction among long-term holders. However, the stock continues to offer an attractive dividend yield of 4.06%, which may provide some support to the price amid volatility.

Fundamental Ratings and Market Capitalisation

TCS holds a substantial market capitalisation of ₹9,71,456.50 crores, categorising it firmly as a large-cap stock within the Computers - Software & Consulting sector. The company’s Mojo Score currently stands at 51.0, with a Mojo Grade of Hold, upgraded from a previous Sell rating on 22 April 2025. This upgrade reflects a slight improvement in the company’s fundamentals or market positioning, though the overall outlook remains cautious.

The market cap grade is rated at 1, indicating the highest tier in terms of size and liquidity, which is corroborated by the stock’s ability to handle trade sizes up to ₹18.29 crores based on 2% of its five-day average traded value. This liquidity ensures that institutional investors can transact sizeable volumes without significant price impact.

Options Activity Reflects Bullish Positioning Despite Technical Headwinds

The concentration of call option volumes at strikes above the current market price suggests that traders are betting on a rebound in TCS’s share price. The open interest data supports this view, with the ₹2,800 strike exhibiting a particularly high level of outstanding contracts, which could translate into significant price support or resistance depending on expiry outcomes.

However, the stock’s failure to break above key moving averages and the decline in delivery volumes indicate that the broader investor base remains cautious. This divergence between derivatives market optimism and spot market technical weakness is not uncommon in large-cap stocks, where institutional hedging and speculative positioning can create complex price dynamics.

Investors should also consider the broader sector and market context. The Computers - Software & Consulting sector has experienced mixed returns recently, with TCS’s 1-day return at -0.04% slightly outperforming the sector’s -0.57% but lagging behind the Sensex’s 0.64% gain. This relative performance underscores the stock’s defensive characteristics amid sectoral headwinds.

Valuation and Dividend Appeal

At its current price, TCS offers a dividend yield of 4.06%, which is attractive relative to many peers in the technology sector. This yield may appeal to income-focused investors seeking stability in a volatile market environment. Nonetheless, the stock’s proximity to its 52-week low and subdued momentum metrics warrant a cautious approach.

Given the recent upgrade from Sell to Hold by MarketsMOJO, investors may interpret this as a signal to monitor the stock closely for signs of a sustained recovery rather than an immediate buy opportunity. The Mojo Score of 51.0 reflects a neutral stance, balancing the company’s strong market position against near-term uncertainties.

Expiry Patterns and Market Implications

The 24 February 2026 expiry date is a focal point for TCS options traders, with significant open interest and turnover concentrated at the two key call strikes. This expiry could prove pivotal in determining near-term price direction, as option writers and holders adjust their positions in response to market developments.

Should the stock price approach or surpass the ₹2,700 and ₹2,800 levels, short-term bullish momentum may accelerate, potentially triggering a technical breakout. Conversely, failure to breach these strikes could result in profit-taking and increased volatility as option premiums decay.

Investors and traders should monitor open interest changes and volume trends closely in the days leading up to expiry to gauge market sentiment and potential price catalysts.

Conclusion: Balanced Outlook Amid Divergent Signals

Tata Consultancy Services Ltd. presents a nuanced investment case at present. The surge in call option activity signals optimism among derivatives traders, who appear to be positioning for a price recovery above current levels. However, the stock’s technical weakness, declining investor participation, and proximity to 52-week lows counsel caution.

Fundamental upgrades and a solid dividend yield provide some support, but the Hold rating and neutral Mojo Score suggest that investors should weigh risks carefully. Those considering exposure to TCS may benefit from monitoring option expiry dynamics and broader sector trends before committing to sizeable positions.

Overall, TCS remains a key bellwether in the Indian IT sector, with its options market activity offering valuable insights into investor expectations and potential price trajectories in the near term.

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