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

Robust Call Option Volumes Signal Bullish Sentiment

Data from the derivatives market reveals that TCS’s call options have attracted significant interest, with the most active strikes clustered around ₹2700, ₹2740, and ₹2800. The 2800 strike price call option led the pack with 9,031 contracts traded, followed by the 2700 strike with 6,532 contracts and the 2740 strike with 6,184 contracts. This heightened activity corresponds to a combined turnover exceeding ₹1,990 crores, underscoring the substantial capital flow into bullish bets on the stock.

Open interest figures further reinforce this trend, with the 2800 strike call option holding the highest open interest at 8,488 contracts, indicating sustained investor interest and potential for price movement towards this level. The 2700 and 2740 strikes also maintain considerable open interest of 4,539 and 2,950 contracts respectively, suggesting that traders are positioning for a near-term upside.

Underlying Stock Performance and Technical Context

Currently, TCS is trading at ₹2,734, just below the 2740 strike price, which is a critical level for option traders. The stock has gained 1.31% in the last trading session, slightly underperforming the sector’s 1.62% rise but outperforming the Sensex, which declined by 0.22%. Notably, TCS has recorded consecutive gains over the past two days, delivering a 1.86% return during this period.

However, the technical picture remains mixed. The stock is trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, indicating a bearish trend in the short to medium term. Additionally, investor participation has waned, with delivery volumes on 16 February falling by 58.55% compared to the five-day average, signalling reduced conviction among long-term holders.

Despite these headwinds, TCS offers a relatively attractive dividend yield of 4.02%, which may provide some support to the stock price amid volatility. Liquidity remains robust, with the stock capable of handling trade sizes up to ₹37.74 crores based on 2% of the five-day average traded value, ensuring ease of entry and exit for institutional investors.

Mojo Score Upgrade Reflects Changing Market Perception

TCS’s MarketsMOJO score currently stands at 51.0, reflecting a Hold rating, an improvement from its previous Sell grade as of 22 April 2025. This upgrade suggests a stabilising outlook, though the stock has yet to demonstrate a decisive turnaround in momentum. The company’s market capitalisation remains substantial at ₹9,92,115.78 crores, firmly placing it in the Large Cap category with a Market Cap Grade of 1, indicating strong institutional interest and market depth.

Investors should note that while the stock’s fundamentals remain solid, the technical indicators and recent price action warrant caution. The elevated call option activity near the current price level may be indicative of traders anticipating a breakout, but the stock’s inability to sustain above key moving averages tempers enthusiasm.

Expiry Patterns and Investor Positioning

The 24 February 2026 expiry date is fast approaching, and the concentration of call option trades at strikes slightly above the current market price suggests a bullish tilt among option buyers. The 2800 strike, in particular, is a focal point, with the highest open interest and volume, implying that investors expect the stock to breach this level within the next week.

Such positioning often reflects speculative optimism or hedging strategies by institutional players. The sizeable turnover in these call options, amounting to over ₹1,990 crores, highlights the significant risk appetite prevailing in the derivatives segment for TCS. Traders should monitor open interest changes closely in the coming sessions to gauge whether this bullish sentiment is sustained or if profit-taking emerges.

Sector and Market Context

Within the Computers - Software & Consulting sector, TCS remains a dominant player, but its recent performance has been in line with sector averages rather than outperforming. The sector itself has shown resilience, with a 1.62% gain on the last trading day, marginally ahead of TCS’s 1.31% rise. This relative underperformance, combined with the stock’s technical weakness, suggests that investors may be selectively rotating capital within the sector.

Given the broader market backdrop, where the Sensex declined by 0.22%, TCS’s ability to maintain gains is a positive sign. However, the stock’s falling investor participation and trading below key moving averages highlight the need for cautious optimism. The elevated dividend yield of 4.02% may attract income-focused investors, providing some price support amid volatility.

Investor Takeaway

For investors and traders, the current surge in call option activity in TCS offers both opportunity and risk. The concentration of open interest and volume at strikes near and above the current price level indicates a market expectation of upward movement in the near term. However, the stock’s technical indicators and reduced delivery volumes counsel prudence.

Those bullish on TCS may consider leveraging call options at the 2700 to 2800 strikes to capitalise on potential upside while managing risk. Conversely, investors should remain vigilant for any signs of reversal, especially if the stock fails to break above its moving averages or if open interest begins to decline sharply.

Overall, TCS’s derivatives market activity reflects a nuanced market view: optimistic but tempered by caution, with investors closely watching the upcoming expiry for confirmation of the stock’s next directional move.

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