Tata Consultancy Services Sees Robust Call Option Activity Ahead of January Expiry

Overview of Call Option Activity

The most active call options for TCS are clustered around strike prices ranging from ₹3,200 to ₹3,400, all expiring on 27 January 2026. The underlying stock closed at ₹3,196.5, positioning the ₹3,200 strike as near-the-money, while the ₹3,240, ₹3,300, and ₹3,400 strikes represent progressively out-of-the-money calls.

Among these, the ₹3,200 strike call option recorded the highest number of contracts traded at 5,781, generating a turnover of ₹546.3 lakhs and an open interest of 4,870 contracts. This indicates strong speculative interest close to the current market price, suggesting traders are positioning for a potential rebound or consolidation near this level.

The ₹3,300 strike call option saw 4,497 contracts traded with a turnover of ₹149.8 lakhs and a notably higher open interest of 14,066 contracts. This elevated open interest signals significant outstanding positions, possibly reflecting institutional hedging or bullish bets anticipating a rally beyond this level.

Meanwhile, the ₹3,400 strike call option, the most out-of-the-money among the active strikes, recorded 3,595 contracts traded, a turnover of ₹42.6 lakhs, and an open interest of 8,474 contracts. The substantial open interest here suggests that some market participants are optimistic about a strong upside move in TCS shares before expiry.

Price and Market Context

Despite the robust call option activity, TCS shares have experienced a modest decline of 0.41% on the day, slightly underperforming the sector’s 0.35% drop and broadly in line with the Sensex’s 0.47% fall. The stock’s current price of ₹3,196.5 remains above its 50-day and 100-day moving averages but below the 5-day, 20-day, and 200-day averages, indicating mixed technical signals.

Investor participation has waned recently, with delivery volumes falling by 24.3% against the five-day average, suggesting some caution among long-term holders. However, TCS continues to offer a healthy dividend yield of 3.99%, which may provide some support to the stock price amid volatility.

Liquidity remains adequate, with the stock’s average traded value supporting trade sizes up to ₹18.37 crores, ensuring that option and stock traders can execute sizeable positions without significant market impact.

Mojo Score and Analyst Ratings

TCS currently holds a Mojo Score of 62.0, categorised as a 'Hold' rating, an upgrade from its previous 'Sell' grade as of 22 April 2025. This improvement reflects a more balanced outlook on the stock’s near-term prospects, factoring in its large market capitalisation of ₹11,60,682 crores and steady sector performance.

The company’s Market Cap Grade remains at 1, indicating its status as a large-cap stock with significant institutional interest. The upgrade in rating suggests analysts are recognising the stock’s resilience amid sector headwinds, though caution persists given the mixed technical indicators and recent price softness.

Expiry Patterns and Bullish Positioning

The concentration of open interest at the ₹3,300 strike, coupled with substantial volumes at the ₹3,200 and ₹3,400 strikes, points to a market expectation of upward price movement in the coming weeks. Traders appear to be positioning for a potential breakout above the current price, with the January expiry serving as a key timeframe for realising gains.

Such positioning is consistent with a moderately bullish outlook, where investors are willing to pay premiums for call options at strikes slightly above the current market price. The high turnover at the ₹3,200 strike also indicates active trading near the money, possibly reflecting hedging strategies or short-term speculative bets.

However, the relatively lower turnover and open interest at the ₹3,240 strike compared to adjacent strikes may suggest some uncertainty or profit-taking at this level, highlighting the nuanced sentiment among market participants.

Implications for Investors and Traders

For investors, the current call option activity signals a cautiously optimistic market stance on TCS. The stock’s dividend yield and large-cap status provide defensive qualities, while the upgraded Mojo rating suggests improving fundamentals or sentiment.

Traders focusing on options should note the significant open interest at the ₹3,300 strike, which may act as a magnet for price movement as expiry nears. The high turnover at the ₹3,200 strike also indicates liquidity and potential short-term trading opportunities.

Nevertheless, the slight underperformance relative to the sector and Sensex, combined with mixed moving average signals, advises prudence. Investors should monitor upcoming earnings, sector developments, and broader market trends to gauge whether the bullish positioning in options translates into sustained price appreciation.

Overall, the data suggests that while the market is positioning for upside, there remains a degree of caution, making TCS a stock to watch closely in the coming weeks.

Technical and Fundamental Summary

TCS’s share price currently trades above its 50-day and 100-day moving averages, indicating medium-term support, but below shorter and longer-term averages, reflecting recent volatility. The delivery volume decline hints at reduced conviction among long-term holders, though the dividend yield near 4% remains attractive for income-focused investors.

The company’s large market capitalisation and sector leadership underpin its status as a core portfolio holding, but the recent Mojo rating upgrade from 'Sell' to 'Hold' signals that analysts are awaiting clearer catalysts before turning more bullish.

In the options market, the concentration of activity at strikes above the current price suggests a tilt towards bullish speculation, albeit with measured risk given the proximity of the near-the-money strikes.

Conclusion

Tata Consultancy Services Ltd. is currently at a crossroads, with active call option trading reflecting a market poised for potential gains but tempered by recent price softness and mixed technical signals. The January 27 expiry will be a critical juncture to watch, as the resolution of these option positions could drive volatility and directional moves.

Investors and traders should balance the stock’s defensive qualities and dividend yield against the evolving market sentiment and option positioning. As always, a disciplined approach with attention to risk management will be essential in navigating TCS’s near-term outlook.

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