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

Robust Call Option Trading Highlights Investor Optimism

The most active call option for TCS is the 3000 strike price expiring on 24 February 2026, where a substantial 5,248 contracts changed hands. This activity generated a turnover of ₹441.11 lakhs, signalling significant investor interest in bullish bets at this strike. Open interest at this level stands at 11,044 contracts, underscoring sustained positioning rather than mere speculative spikes.

Given the underlying stock price of ₹2,973.40, the 3000 strike is slightly out-of-the-money, suggesting traders anticipate a potential upward move beyond this level within the next two weeks. The concentration of call buying at this strike price and expiry date reflects a strategic bullish stance, possibly driven by expectations of positive earnings, contract wins, or sector tailwinds.

Price and Technical Context

TCS’s current market price is approximately 3.61% above its 52-week low of ₹2,866.60, indicating the stock is trading near a significant support zone. Despite this proximity to the low, the stock has outperformed its sector by 0.87% today and has recorded consecutive gains over the past two sessions, delivering a 1.1% return in that period. However, it remains below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—highlighting a technically weak trend that may require confirmation of a reversal.

Investor participation appears to be waning, with delivery volume on 9 February falling by 45.36% compared to the five-day average, suggesting cautious accumulation or profit-taking by long-term holders. Nonetheless, TCS offers a relatively high dividend yield of 3.7%, which may provide some defensive appeal amid volatility.

Market Capitalisation and Quality Assessment

As a large-cap entity with a market capitalisation of ₹10,66,287 crores, TCS remains a heavyweight in the Indian IT sector. Its Mojo Score currently stands at 51.0, reflecting a Hold rating, an upgrade from a Sell rating issued on 22 April 2025. This shift indicates improving fundamentals or sentiment, although the Market Cap Grade remains at 1, signalling limited upside from a valuation perspective.

Sector and Benchmark Comparison

On a one-day basis, TCS delivered a 0.90% return, outperforming the Computers - Software & Consulting sector’s 0.50% gain and the Sensex’s 0.32% rise. This relative strength amid a broadly positive market environment suggests selective buying interest in TCS shares. However, the stock’s trading below all major moving averages signals that the rally may be tentative and requires confirmation through sustained volume and price action.

Liquidity remains adequate, with the stock’s average traded value supporting trade sizes up to ₹33.68 crores based on 2% of the five-day average traded value. This ensures that institutional investors can enter or exit positions without significant market impact.

Options Market Sentiment and Expiry Dynamics

The concentration of call option activity at the 3000 strike price with expiry on 24 February 2026 is particularly noteworthy. Open interest of 11,044 contracts at this strike indicates that many traders are either holding bullish positions or hedging existing exposure. The high turnover of ₹441.11 lakhs further confirms active trading and interest in this strike.

Such positioning often precedes a critical expiry, where price movements can be amplified by option-related hedging flows. If TCS’s price approaches or surpasses the 3000 level, short sellers of calls may need to buy shares to hedge, potentially accelerating upward momentum. Conversely, failure to breach this strike could lead to profit-taking and a reversion to lower levels.

Investor Takeaways and Outlook

For investors, the current scenario presents a mixed picture. The bullish call option activity at the 3000 strike price suggests optimism about a near-term price recovery. However, the stock’s technical weakness, trading below all major moving averages, and falling delivery volumes caution against aggressive positioning without confirmation.

Dividend yield of 3.7% offers a steady income component, which may appeal to income-focused investors amid market uncertainty. The recent upgrade in Mojo Grade from Sell to Hold reflects improving fundamentals but also signals that upside remains limited without a catalyst.

Market participants should monitor price action closely as the 24 February expiry approaches. A decisive move above the 3000 level could trigger further bullish momentum, supported by option-related hedging flows. Conversely, failure to sustain gains may result in consolidation or renewed weakness near the 52-week low.

Given TCS’s large-cap status and sector leadership, it remains a key stock to watch within the Computers - Software & Consulting space. Investors should balance the technical signals with fundamental strengths and sector trends when considering exposure.

Summary

Tata Consultancy Services Ltd. is currently at a pivotal juncture, with heavy call option activity signalling bullish sentiment ahead of the 24 February 2026 expiry. While the stock trades near its 52-week low and below key moving averages, recent outperformance relative to sector and benchmark indices, combined with a solid dividend yield, provide a nuanced outlook. Investors are advised to weigh the technical caution against the positive option market positioning and fundamental upgrades when making portfolio decisions.

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