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

Put Option Activity Highlights

On 5 February 2026, TCS recorded the most active put options in the market, with 4,789 contracts traded at the ₹3,000 strike price expiring on 24 February 2026. The turnover for these contracts reached ₹54.29 crores, reflecting significant investor interest in downside protection or speculative bearish bets. Open interest stands at 6,913 contracts, indicating sustained positioning rather than a transient spike.

The underlying stock closed at ₹2,992, just 4.61% above its 52-week low of ₹2,866.6, underscoring the proximity to critical support levels. This strike price is strategically placed slightly above the current market price, suggesting that traders are positioning for a potential decline or hedging existing long exposures.

Price and Technical Context

TCS has underperformed its own sector marginally today, with a 0.13% decline compared to the sector’s 0.22% drop and the broader Sensex’s 0.47% fall. Notably, the stock is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a bearish technical setup. This downward momentum is further accentuated by a sharp rise in delivery volume, which surged by 261.55% to 73.91 lakh shares on 4 February, compared to the five-day average.

Despite the bearish technicals, TCS offers a relatively high dividend yield of 3.63%, which may provide some cushion for long-term investors amid volatility. The stock’s liquidity remains robust, with a trade size capacity of ₹31.67 crores based on 2% of the five-day average traded value, ensuring that large trades can be executed without significant price impact.

Investor Sentiment and Hedging Implications

The elevated put option activity at the ₹3,000 strike price suggests that market participants are either hedging existing long positions or speculating on a near-term decline. Given TCS’s current trading below all major moving averages and close to its yearly lows, the bearish sentiment is understandable. The open interest of 6,913 contracts further confirms that this is not merely a short-term reaction but a more sustained positioning.

Institutional investors and portfolio managers may be using these put options as a risk management tool to protect against further downside, especially in a sector that has seen mixed performance amid global economic uncertainties. The Computers - Software & Consulting sector, while generally resilient, has faced headwinds from fluctuating IT spending and currency volatility, factors that could be influencing cautious positioning in TCS.

Fundamental and Market Grade Analysis

TCS currently holds a Market Cap Grade of 1, reflecting its status as a large-cap leader with a market capitalisation of ₹10,83,689.57 crores. The company’s Mojo Score stands at 51.0, with a Mojo Grade upgraded to Hold from Sell as of 22 April 2025. This upgrade indicates a modest improvement in fundamentals or market perception, though the stock remains under watch for further directional clarity.

Despite the recent upgrade, the stock’s technical weakness and increased put option interest highlight a cautious stance among investors. The divergence between fundamental grading and market sentiment underscores the complexity of the current environment, where valuation and earnings prospects may not fully align with near-term price action.

Expiry Patterns and Market Outlook

The 24 February 2026 expiry date for the active put options is just weeks away, suggesting that traders are positioning for potential volatility in the near term. This expiry coincides with the end of the current fiscal quarter, a period often marked by portfolio rebalancing and earnings anticipation. The concentration of put contracts at the ₹3,000 strike price indicates a key psychological and technical level for market participants.

Looking ahead, investors should monitor whether the stock can reclaim its moving averages and break above the ₹3,000 level to alleviate bearish pressures. Conversely, a sustained drop below the 52-week low could trigger further downside and increased hedging activity. The interplay between fundamental strength, dividend yield, and technical signals will be critical in shaping TCS’s trajectory.

Comparative Sector and Market Performance

While TCS has slightly outperformed its sector by 0.26% today, the broader Computers - Software & Consulting sector remains under pressure, reflecting global IT spending concerns and macroeconomic uncertainties. The Sensex’s sharper decline of 0.47% today highlights the relative resilience of TCS, albeit within a cautious framework.

Investors should weigh TCS’s large-cap stability and dividend yield against the technical weakness and elevated put option interest. This balanced view is essential for making informed decisions in a market environment where risk management is paramount.

Conclusion

The surge in put option activity in Tata Consultancy Services Ltd. ahead of the 24 February 2026 expiry underscores a growing bearish sentiment and hedging demand among investors. Trading near its 52-week low and below all major moving averages, TCS faces technical headwinds despite a recent fundamental upgrade to Hold. The ₹3,000 strike price has emerged as a critical level, with significant open interest signalling sustained market focus.

For investors, this environment calls for careful analysis of both technical signals and fundamental metrics. While the stock’s dividend yield and large-cap status offer some defensive qualities, the increased put option volume suggests caution is warranted in the near term. Monitoring expiry dynamics and sector trends will be key to navigating TCS’s evolving market landscape.

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