Tata Consultancy Services Sees Heavy Call Option Activity Ahead of February Expiry

Robust Call Option Volumes Highlight Investor Confidence

The most active call options for TCS are centred on the 24 February 2026 expiry, with the ₹3,300 strike price attracting the highest interest. On 3 February 2026, a total of 6,412 contracts were traded, generating a turnover of approximately ₹467.69 lakhs. Open interest remains substantial at 5,028 contracts, underscoring sustained investor engagement in this strike band.

This elevated activity in call options suggests that market participants are positioning for a potential rally beyond the current underlying price of ₹3,209.80. The strike price of ₹3,300 is roughly 2.8% above the prevailing stock price, indicating a moderately bullish outlook among traders who anticipate the stock to breach this level by expiry.

Price Action and Technical Indicators Support Bullish Positioning

On the trading day, TCS opened with a gap up of 5.69%, reaching an intraday high of ₹3,350, which is above the key strike price attracting call option interest. Despite this strong start, the stock underperformed its sector by 0.69%, closing with a modest gain of 1.31%, compared to the IT - Software sector’s 2.11% advance and the Sensex’s 2.56% rise.

Technically, TCS is trading above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling a sustained uptrend. This technical strength aligns with the bullish sentiment reflected in the options market, where traders are willing to pay premiums for calls at strike prices above the current market level.

However, it is noteworthy that delivery volumes have declined by 20.4% against the 5-day average, with 16.46 lakh shares delivered on 2 February 2026. This drop in investor participation could indicate some caution or profit-taking despite the positive price momentum.

Fundamental and Market Context

TCS remains a heavyweight in the Computers - Software & Consulting sector with a market capitalisation of ₹11,61,767.90 crores, categorised as a large-cap stock. The company’s Mojo Score has improved to 57.0, upgrading its Mojo Grade from Sell to Hold as of 22 April 2025, reflecting a more stable outlook amid evolving market conditions.

The stock offers a dividend yield of 3.44%, which is attractive in the current interest rate environment, potentially supporting investor interest in both equity appreciation and income generation. Liquidity remains robust, with the stock capable of handling trade sizes up to ₹18.55 crores based on 2% of the 5-day average traded value, ensuring ease of entry and exit for institutional and retail investors alike.

Options Market Insights: Expiry Patterns and Strike Price Concentration

The concentration of call option activity at the ₹3,300 strike price for the 24 February expiry is particularly telling. This strike is a key psychological and technical level, and the high open interest suggests that many traders expect the stock to test or surpass this price point within the next three weeks.

Moreover, the weighted average price of traded options indicates that more volume has been executed closer to the lower price range, which may imply cautious optimism. Traders appear to be balancing risk and reward, buying calls at strike prices that offer a reasonable chance of profitability without excessive premium costs.

Such positioning often precedes a period of heightened volatility as expiry approaches, with investors closely monitoring quarterly earnings, sector developments, and broader market cues that could influence TCS’s trajectory.

Sector and Broader Market Comparison

While TCS underperformed the IT - Software sector on the day, the sector itself has gained 2.11%, supported by positive global technology trends and robust demand for digital transformation services. The Sensex’s 2.56% gain further highlights the overall bullish market environment, which could provide tailwinds for TCS in the near term.

Investors should note that the IT sector is currently benefiting from strong order books and increasing client spends, factors that could underpin TCS’s earnings growth and justify the bullish options positioning.

Investor Takeaway and Outlook

The surge in call option volumes at the ₹3,300 strike price ahead of the 24 February expiry reflects a cautiously optimistic market stance on TCS. While the stock has demonstrated technical strength and offers a healthy dividend yield, the recent dip in delivery volumes suggests some investors may be taking profits or awaiting clearer catalysts.

Given the company’s large-cap status, stable fundamentals, and sector tailwinds, the current options activity could be signalling a near-term breakout opportunity. However, investors should remain vigilant to broader market volatility and sector-specific risks, including global IT spending trends and currency fluctuations.

For those considering exposure, monitoring the evolving open interest and price action in the coming weeks will be crucial to gauge whether the bullish sentiment translates into sustained price appreciation or if a consolidation phase ensues.

Summary

Tata Consultancy Services Ltd. is currently at a pivotal juncture, with its options market revealing a strong preference for call contracts at a strike price moderately above the current market level. This positioning, combined with positive technical indicators and a supportive sector environment, suggests that investors are preparing for potential gains in the near term. Nevertheless, the mixed signals from delivery volumes and relative sector performance warrant a balanced approach to investment decisions.

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