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

Put Option Activity Highlights

On 10 February 2026, TCS recorded the most active put option contracts with the 2,900 strike price expiring on 24 February 2026. A total of 1,790 contracts were traded, generating a turnover of ₹10.12 crores (101.18 lakhs) and an open interest of 4,319 contracts. This level of activity is significant given the underlying stock price of ₹2,973.40, which is just 3.61% above its 52-week low of ₹2,866.60.

The concentration of put options at the 2,900 strike price suggests that investors are positioning for a potential downside or are hedging existing long positions against further declines. The open interest figure indicates that a substantial number of contracts remain outstanding, reflecting sustained bearish sentiment or protective strategies.

Stock Performance and Technical Context

Despite the surge in put option interest, TCS has outperformed its sector by 0.87% on the day, closing with a 1.03% gain compared to the sector’s 0.50% and Sensex’s 0.32% returns. The stock has recorded consecutive gains over the past two sessions, delivering a 1.1% return in this period. However, it continues to trade below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a prevailing downtrend.

Investor participation appears to be waning, with delivery volumes on 9 February falling by 45.36% to 18.17 lakh shares compared to the five-day average. This decline in delivery volume may indicate reduced conviction among buyers, potentially contributing to the increased demand for downside protection via put options.

Dividend Yield and Market Capitalisation

TCS offers a relatively high dividend yield of 3.7% at the current price level, which may provide some support to the stock amid volatility. The company remains a large-cap heavyweight with a market capitalisation of ₹10,77,647.37 crores, underscoring its significance in the Computers - Software & Consulting sector.

Investor Sentiment and Hedging Implications

The elevated put option activity at the 2,900 strike price, which is slightly below the current market price, indicates that investors are either speculating on a near-term decline or seeking to hedge against downside risk. This is a common strategy in volatile or uncertain market conditions, especially for large-cap stocks like TCS that have experienced recent weakness.

Given the stock’s proximity to its 52-week low and its position below all major moving averages, technical traders may interpret this as a bearish signal. The put option volume and open interest data reinforce this view, suggesting that market participants are preparing for potential downside or protecting profits from recent gains.

Comparative Sector and Market Analysis

Within the Computers - Software & Consulting sector, TCS’s mojo score stands at 51.0, reflecting a Hold rating. This is an improvement from its previous Sell grade as of 22 April 2025, indicating a modest upgrade in outlook. However, the market cap grade remains at 1, signalling that while the company is a large-cap leader, its valuation or momentum metrics may not be compelling enough to warrant a stronger buy rating at present.

Sector peers have shown mixed performance, with TCS outperforming the sector index marginally on the day. Yet, the overall sector trend remains cautious, with investors closely monitoring earnings prospects and macroeconomic factors impacting the technology consulting space.

Expiry Patterns and Market Outlook

The 24 February 2026 expiry date for the active put options is just two weeks away, which adds urgency to the positioning. Traders often increase option activity as expiry approaches, either to capitalise on short-term moves or to adjust hedges. The concentration of open interest at the 2,900 strike price suggests that this level is a key psychological and technical barrier for the stock.

Market participants will be watching closely for any catalysts that could push TCS below this strike price, such as disappointing quarterly results, sector headwinds, or broader market volatility. Conversely, a sustained move above this level could see put option interest decline as bearish bets are unwound.

Liquidity and Trading Considerations

TCS remains a highly liquid stock, with a trading capacity of approximately ₹33.68 crores based on 2% of its five-day average traded value. This liquidity supports active options trading and allows institutional investors to implement complex hedging strategies without significant market impact.

However, the recent drop in delivery volume signals a cautious approach by long-term investors, which may contribute to increased volatility in the near term. Traders should monitor option chain data and volume trends closely to gauge shifts in market sentiment.

Conclusion

The surge in put option activity for Tata Consultancy Services Ltd. ahead of the 24 February expiry highlights a growing bearish sentiment or hedging demand among investors. While the stock has shown some resilience with recent gains and a decent dividend yield, technical indicators and option market data suggest caution.

Investors should weigh the risks of further downside against the company’s strong market position and improving mojo grade. Monitoring open interest and strike price concentrations in the options market can provide valuable insights into evolving market expectations and potential price movements.

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