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

Robust Put Option Volume Signals Bearish Hedging

The put options for TCS expiring on 27 January 2026 have emerged as the most actively traded contracts in the segment, with 7,522 contracts changing hands. This surge in put option volume, coupled with an open interest of 5,765 contracts, suggests a notable increase in bearish positioning or hedging strategies among market participants. The turnover for these puts stands at ₹827.98 lakhs, underscoring the substantial capital flow directed towards downside protection.

Given the underlying stock price of ₹3,214.30, the ₹3,200 strike price is positioned just below the current market level, indicating that investors are preparing for a potential pullback or increased volatility in the near term. This activity is particularly relevant considering TCS's recent trading patterns and technical indicators.

Technical Landscape: Mixed Signals from Moving Averages

TCS's price action reveals a nuanced technical picture. The stock is trading above its 50-day and 100-day moving averages, which typically signals medium-term strength. However, it remains below the 5-day, 20-day, and 200-day moving averages, indicating short-term weakness and a lack of confirmation for a sustained uptrend. This divergence may be prompting traders to seek downside protection through put options.

Additionally, the delivery volume on 8 January 2026 surged to 24.86 lakh shares, a 94.58% increase compared to the five-day average delivery volume. This heightened investor participation suggests growing interest and possibly increased uncertainty about the stock’s immediate direction.

Dividend Yield and Liquidity Support Trading Activity

Despite the cautious positioning, TCS continues to offer a healthy dividend yield of 3.99% at current prices, which may provide some comfort to long-term investors. The stock’s liquidity remains robust, with the ability to support trade sizes of up to ₹17.29 crore based on 2% of the five-day average traded value. This liquidity ensures that both institutional and retail investors can execute sizeable trades without significant price impact.

Mojo Score Upgrade Reflects Changing Market Sentiment

MarketsMOJO’s latest assessment upgraded TCS’s Mojo Grade from Sell to Hold on 22 April 2025, reflecting a more balanced outlook. The company holds a Mojo Score of 65.0, indicating moderate confidence in its fundamentals and near-term prospects. Despite this upgrade, the stock’s Market Cap Grade remains at 1, denoting its status as a large-cap heavyweight with a market capitalisation of ₹11,61,931 crore.

This nuanced rating aligns with the observed option market behaviour, where investors are hedging against potential downside risks while recognising the company’s underlying strength.

Sector and Benchmark Comparison

On 9 January 2026, TCS’s stock price rose by 0.30%, slightly outperforming the Computers - Software & Consulting sector’s gain of 0.17%. Meanwhile, the broader Sensex index declined by 0.70%, highlighting TCS’s relative resilience amid broader market weakness. This outperformance may be attracting both cautious longs and protective shorts, contributing to the elevated put option interest.

Expiry Patterns and Investor Strategies

The January expiry cycle often sees increased option activity as traders adjust positions ahead of quarterly results and macroeconomic updates. The concentration of put contracts at the ₹3,200 strike price suggests a key psychological and technical support level for TCS. Investors may be using these puts either as outright bearish bets or as insurance against a correction in the stock price.

Open interest data indicates that many of these positions remain open, signalling that market participants are maintaining their hedges or bearish stances into the expiry week. This could translate into heightened volatility and price sensitivity around this level in the coming days.

Implications for Investors and Traders

The surge in put option activity at a strike price close to the current market level suggests that investors are bracing for potential downside or increased volatility in TCS shares. For long-term investors, the stock’s solid dividend yield and large-cap status provide a cushion against short-term fluctuations. However, traders should be mindful of the mixed technical signals and the possibility of near-term corrections.

Hedging through puts can be a prudent strategy in such an environment, allowing investors to protect gains or limit losses without liquidating positions. Conversely, speculative traders might view the elevated put volumes as an opportunity to capitalise on potential volatility spikes around expiry.

Outlook and Conclusion

Tata Consultancy Services remains a cornerstone of the Indian IT sector, but the current option market dynamics reveal a cautious stance among investors. The combination of technical resistance, increased delivery volumes, and heavy put option interest points to a market that is preparing for possible near-term turbulence while acknowledging the company’s underlying strength.

As the 27 January expiry approaches, monitoring open interest changes and price movements around the ₹3,200 strike will be crucial for gauging investor sentiment and potential price direction. Investors should balance the stock’s attractive fundamentals with the evident hedging activity to make informed decisions in this evolving landscape.

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