Tata Consultancy Services Sees Surge in Call Option Activity Ahead of February Expiry

Strong Call Option Activity Highlights Investor Sentiment

TCS recorded a remarkable 3,696 call option contracts traded for the 24 February 2026 expiry at the ₹3,300 strike price, generating a turnover of ₹16.40 crores. Open interest stands at 5,582 contracts, underscoring sustained investor interest in this strike. The underlying stock closed at ₹3,172.60, indicating that the ₹3,300 strike is out-of-the-money but within striking distance, suggesting traders are positioning for a potential upside move in the coming weeks.

This heightened call option activity contrasts with the stock’s day change of -0.36%, reflecting a divergence between spot price movement and derivatives market optimism. The active call buying may be interpreted as a hedge or speculative bet on a rebound, especially given the stock’s recent technical positioning.

Technical and Market Context

TCS’s price action reveals a complex technical picture. The stock is trading above its 5-day and 100-day moving averages but remains below the 20-day, 50-day, and 200-day averages. This mixed pattern suggests short-term strength but longer-term resistance hurdles remain. The stock outperformed its sector by 0.41% on the day, while the broader Sensex gained 0.22%, indicating relative resilience within the Computers - Software & Consulting sector.

Investor participation has notably increased, with delivery volume reaching 22.79 lakh shares on 30 January, a 22.35% rise compared to the five-day average. This uptick in delivery volume signals genuine buying interest rather than purely speculative trading. Additionally, TCS offers a high dividend yield of 3.42%, which may appeal to income-focused investors amid volatile markets.

Fundamental and Market Cap Considerations

TCS remains a large-cap heavyweight with a market capitalisation of ₹11,52,415 crore, classified under the Computers - Software & Consulting industry. Its Mojo Score currently stands at 57.0, reflecting a Hold rating, an upgrade from a Sell rating on 22 April 2025. This improvement signals a stabilising outlook, though the stock has yet to demonstrate a decisive bullish trend.

The company’s market cap grade is 1, indicating its dominant position in the market. Liquidity remains robust, with the stock capable of handling trade sizes up to ₹20.7 crore based on 2% of the five-day average traded value, making it accessible for institutional and retail investors alike.

Expiry Patterns and Strike Price Analysis

The choice of the ₹3,300 strike price for the February expiry is telling. It sits approximately 3.9% above the current underlying price, suggesting traders anticipate a moderate rally within the next three weeks. The open interest of 5,582 contracts at this strike is among the highest for TCS, indicating a concentration of bullish bets.

Such positioning often precedes earnings announcements or sectoral catalysts, though no immediate event is scheduled before expiry. The call option turnover of ₹16.4 crore is significant, reflecting active participation from both hedgers and speculators. This activity may also be influenced by broader market dynamics, including sector rotation and global IT spending trends.

Sectoral and Broader Market Comparison

Within the Computers - Software & Consulting sector, TCS’s slight outperformance contrasts with a sector decline of 0.35% on the day. This relative strength may attract investors seeking defensive exposure amid uncertain macroeconomic conditions. However, the stock’s 1-day return of -0.31% indicates short-term volatility, which option traders appear to be capitalising on.

Comparing TCS to its peers, the Hold rating and moderate Mojo Score suggest cautious optimism. Investors should weigh the company’s strong fundamentals and dividend yield against technical resistance and sector headwinds.

Investor Takeaways and Outlook

The surge in call option activity at the ₹3,300 strike price for TCS ahead of the 24 February expiry highlights a cautiously bullish stance among traders. While the underlying stock has experienced a slight pullback, the derivatives market suggests expectations of a rebound or at least a stabilisation above current levels.

Investors should consider the mixed technical signals, with short-term moving averages supporting the stock but longer-term averages indicating resistance. The increased delivery volume and attractive dividend yield provide additional support for a measured investment approach.

Given the Hold rating and moderate Mojo Score, TCS may appeal to investors seeking steady exposure to the IT sector with income benefits, but those looking for aggressive growth might explore alternatives suggested by portfolio optimisation tools.

Overall, the active call option market for TCS reflects a nuanced investor sentiment balancing optimism with caution amid evolving market conditions.

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