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

Robust Call Option Volumes Signal Bullish Sentiment

Data from the latest trading session reveals that TCS's call options have attracted significant attention, particularly at strike prices of ₹2,700, ₹2,740, and ₹2,800, all expiring on 24 February 2026. The most active strike was ₹2,740, with 7,907 contracts traded, generating a turnover of approximately ₹387.58 lakhs and an open interest of 5,139 contracts. Close behind, the ₹2,800 strike saw 5,630 contracts traded, with an open interest of 8,590 contracts and turnover of ₹114.58 lakhs. The ₹2,700 strike also recorded substantial activity, with 4,510 contracts traded and turnover of ₹386.65 lakhs.

This concentration of activity at strikes above the current underlying price suggests a bullish positioning among market participants, anticipating a potential upward move in TCS shares in the near term. The open interest figures, particularly at ₹2,800, indicate that traders are not only initiating fresh positions but also holding onto existing ones, reinforcing the conviction in a positive price trajectory.

Underlying Stock Performance and Technical Context

Despite the bullish options activity, TCS's spot price performance remains somewhat subdued. The stock closed with a modest gain of 0.86% on the day, slightly outperforming its sector's 0.71% rise and contrasting with the broader Sensex's decline of 0.13%. However, technical indicators reveal that TCS is trading below its key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical backdrop suggests some near-term resistance and a cautious investor stance.

Investor participation has also waned recently, with delivery volumes on 18 February falling by 57.65% compared to the five-day average, signalling reduced conviction in the cash market. Nevertheless, the stock maintains a healthy dividend yield of 4.05%, which continues to attract income-focused investors amid market volatility.

Mojo Score Upgrade Reflects Improving Fundamentals

MarketsMOJO’s latest assessment upgraded TCS’s Mojo Grade from Sell to Hold on 22 April 2025, reflecting a stabilisation in the company’s fundamentals and valuation metrics. The current Mojo Score stands at 51.0, indicating a neutral stance with potential for improvement. The market capitalisation remains robust at ₹9,83,432.37 crores, categorising TCS firmly as a large-cap stock with significant institutional interest.

Despite the Hold rating, the stock’s liquidity profile remains strong, with the capacity to handle trade sizes up to ₹37.2 crores based on 2% of the five-day average traded value. This liquidity supports active options trading and provides flexibility for both retail and institutional investors to execute sizeable positions without undue market impact.

Expiry Patterns and Investor Positioning

The 24 February 2026 expiry is shaping up as a critical juncture for TCS options traders. The clustering of call option open interest at strikes above the current price suggests that investors are betting on a breakout beyond ₹2,700 to ₹2,800 levels. This is consistent with a broader market narrative where IT sector stocks are expected to benefit from renewed demand for digital transformation services globally.

Open interest data also reveals that the ₹2,800 strike has the highest concentration of outstanding contracts, implying that this level could act as a significant resistance or target price in the near term. Should the stock breach this level convincingly, it may trigger further call buying and short covering, potentially accelerating the upward momentum.

Risks and Considerations

While the call option activity points to bullish sentiment, investors should remain cautious given the stock’s technical weakness and declining delivery volumes. The broader market environment, including global economic uncertainties and sector-specific challenges, could weigh on TCS’s near-term performance. Additionally, the relatively modest day-on-day price gains suggest that the market is awaiting clearer catalysts before committing to a sustained rally.

Investors should also monitor the expiry dynamics closely, as option expiry days often bring increased volatility and price swings. The interplay between open interest unwinding and fresh positioning could lead to sharp moves in either direction, underscoring the importance of risk management strategies.

Outlook for Investors

For investors considering exposure to TCS, the current options market activity offers valuable insights into market expectations. The bullish skew in call options suggests optimism about the company’s growth prospects and sectoral tailwinds. However, the technical and volume indicators counsel prudence, recommending a balanced approach that weighs potential upside against prevailing risks.

Long-term investors may find comfort in TCS’s strong market capitalisation, dividend yield, and improving Mojo Grade, while traders might exploit the heightened volatility around expiry to capitalise on directional moves. Monitoring open interest changes and strike price concentrations will be crucial in anticipating price action in the coming weeks.

Overall, Tata Consultancy Services Ltd. remains a key bellwether in the IT sector, with its options market activity providing a window into evolving investor sentiment as February expiry approaches.

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