Put Option Surge Highlights Investor Caution
On 31 Dec 2025, TCS recorded the most active put options trading with the 27-Jan-2026 expiry attracting substantial interest. The strike price of ₹3,200 saw 2,366 contracts traded, generating a turnover of ₹211.75 lakhs. Open interest at this strike stands at 3,029 contracts, underscoring a robust build-up of bearish bets or protective hedges against potential downside risks.
The underlying stock price at the time was ₹3,219.60, just marginally above the ₹3,200 strike, indicating that investors are positioning for a possible correction or volatility in the near term. This activity is notable given TCS’s status as a large-cap heavyweight with a market capitalisation of ₹11,68,642 crores.
Recent Price Performance and Technical Indicators
TCS has been on a downward trajectory, losing 2.99% over the past four trading sessions. Its one-day return on 31 Dec was -0.83%, underperforming the sector’s -0.41% and contrasting with the Sensex’s positive 0.50% gain. The stock’s price currently trades above its 50-day and 100-day moving averages but remains below the 5-day, 20-day, and 200-day averages, reflecting mixed technical signals and short-term weakness.
Investor participation has risen notably, with delivery volumes hitting 19.71 lakh shares on 30 Dec, a 63.81% increase over the five-day average. This heightened activity suggests that market participants are actively adjusting their positions amid the recent volatility.
Only 1% make it here. This Large Cap from the Gems, Jewellery And Watches sector passed our rigorous filters with flying colors. Be among the first few to spot this gem!
- - Highest rated stock selection
- - Multi-parameter screening cleared
- - Large Cap quality pick
Mojo Score and Rating Upgrade Reflect Cautious Optimism
TCS’s Mojo Score currently stands at 62.0, with a Mojo Grade upgraded from Sell to Hold on 22 Apr 2025. This upgrade reflects an improvement in the company’s fundamentals and market positioning, although the Hold rating suggests that investors should remain cautious amid prevailing uncertainties. The stock’s market cap grade is 1, indicating its large-cap status and relative stability compared to smaller peers.
Despite the upgrade, the recent price underperformance and increased put option activity highlight that investors are hedging against near-term risks, possibly due to sectoral headwinds or broader market volatility.
Dividend Yield and Liquidity Support Investor Interest
TCS offers a relatively high dividend yield of 3.94% at the current price, which may provide some cushion for long-term investors amid price fluctuations. The stock’s liquidity remains robust, with a trade size capacity of approximately ₹13.48 crores based on 2% of the five-day average traded value, ensuring ease of entry and exit for institutional and retail participants alike.
Expiry Patterns and Market Implications
The concentration of put option contracts at the ₹3,200 strike for the 27-Jan-2026 expiry suggests that market participants are focusing on this level as a critical support or potential downside trigger. Open interest accumulation at this strike price often indicates that traders expect the stock to test or breach this level, or are using these options as insurance against further declines.
Such positioning can lead to increased volatility as expiry approaches, with potential for sharp price movements if the stock nears the strike price. Investors should monitor open interest changes and volume trends closely to gauge evolving market sentiment.
Holding Tata Consultancy Services Ltd. from Computers - Software & Consulting? See if there's a smarter choice! SwitchER compares it with peers and suggests superior options across market caps and sectors!
- - Peer comparison ready
- - Superior options identified
- - Cross market-cap analysis
Broader Market Context and Sectoral Trends
The Computers - Software & Consulting sector has experienced mixed performance recently, with some stocks showing resilience while others face pressure from global economic uncertainties and technology spending slowdowns. TCS’s underperformance relative to its sector by 0.54% on the day reflects these challenges.
Investors are increasingly cautious, as evidenced by the rising put option volumes and open interest, which may also be driven by hedging strategies ahead of key earnings announcements or macroeconomic data releases. The stock’s technical setup, with price below short-term moving averages, further supports a cautious stance.
Investor Takeaway and Strategic Considerations
For investors holding TCS, the current environment suggests prudence. The elevated put option activity at the ₹3,200 strike price signals that downside risk is being actively managed by market participants. Those with long positions may consider protective strategies such as buying puts or tightening stop-loss levels to mitigate potential losses.
Conversely, value investors might view the recent price weakness and dividend yield as an opportunity to accumulate, provided they are comfortable with the sector’s near-term headwinds and the stock’s technical profile.
Monitoring open interest trends and expiry dynamics will be crucial in the coming weeks to anticipate possible volatility spikes and price movements around the January expiry.
Conclusion
Tata Consultancy Services Ltd. remains a key player in the Indian IT sector with a strong market capitalisation and improving fundamental ratings. However, the surge in put option activity and recent price softness highlight a cautious market stance, with investors hedging against potential downside risks. The stock’s technical indicators and delivery volumes suggest active repositioning, making it essential for investors to stay vigilant and consider risk management strategies as the January 2026 expiry approaches.
Only Rs. 9,999 - Get MojoOne + Stock of the Week for 1 Year (MRP = Rs. 34,999) Start Saving Now →
