Tata Consultancy Services Sees Surge in Call Option Activity Amid Price Weakness

Stock Performance and Market Context

TCS, a heavyweight in the Computers - Software & Consulting sector, has been underperforming recently. The stock hit a new 52-week low of ₹2,585 on 13 February 2026, marking a sharp intraday decline of 6%. Over the past three trading sessions, TCS has lost 12.74% in value, significantly underperforming its sector, which itself has fallen by 4.41%. The stock opened with a gap down of 6% on the day, reflecting heightened selling pressure.

Technical indicators also point to bearish momentum, with TCS trading below all major moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day. This broad weakness is compounded by a day change of -4.96%, which is steeper than the Sensex’s 0.98% decline and the sector’s 4.39% fall on the same day.

Despite the recent weakness, TCS maintains a sizeable market capitalisation of ₹9,95,662 crores, categorising it as a large-cap stock. The company also offers a relatively attractive dividend yield of 3.96%, which may provide some cushion for long-term investors amid volatility.

Robust Call Option Activity Signals Bullish Positioning

In contrast to the bearish stock price action, the derivatives market reveals a surge in call option activity, signalling that some investors are betting on a rebound or at least a stabilisation in the near term. The most active call options for TCS are concentrated around strike prices ranging from ₹2,600 to ₹3,000, all expiring on 24 February 2026.

The highest volume of contracts traded was at the ₹2,800 strike price, with 15,648 contracts changing hands, generating a turnover of approximately ₹510.99 lakhs. This was closely followed by the ₹3,000 strike, which saw 10,513 contracts traded, despite a lower turnover of ₹94.75 lakhs, indicating a strong open interest of 18,696 contracts — the largest among all strikes.

Other notable strike prices include ₹2,700 with 9,180 contracts traded (turnover ₹686.46 lakhs) and ₹2,900 with 8,500 contracts (turnover ₹130.31 lakhs). The ₹2,600 strike also saw significant activity with 7,943 contracts traded, generating the highest turnover of ₹1,244.49 lakhs, despite a relatively modest open interest of 2,572 contracts.

This concentration of call option interest above the current underlying value of ₹2,626 suggests that market participants are positioning for a potential upside move, possibly anticipating a technical rebound or positive news flow before expiry. The open interest data further supports this view, with the ₹3,000 strike showing a particularly strong build-up, indicating sustained bullish sentiment at that level.

Mojo Score Upgrade and Market Sentiment

MarketsMOJO recently upgraded TCS’s Mojo Grade from Sell to Hold on 22 April 2025, reflecting a modest improvement in the company’s outlook. The current Mojo Score stands at 51.0, indicating a neutral stance. However, the Market Cap Grade remains at 1, signalling that despite its large-cap status, the stock’s valuation and momentum metrics are not yet compelling enough for a Buy rating.

The downgrade to Hold suggests caution among analysts, who may be awaiting clearer signs of recovery in the IT sector and improved earnings visibility before recommending accumulation. The recent heavy call option activity could be interpreted as speculative positioning by traders rather than a broad-based institutional conviction.

Sectoral and Liquidity Considerations

The IT - Software sector has been under pressure, with a 4.41% decline on the day, reflecting broader concerns about global demand and margin pressures. TCS’s underperformance relative to its sector by 0.67% highlights company-specific challenges or profit-taking by investors.

Investor participation has notably increased, with delivery volumes rising to 65.68 lakh shares on 12 February 2026, a 171.64% jump compared to the five-day average. This surge in volume indicates heightened interest and possibly increased volatility in the stock.

Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting a trade size of approximately ₹30.35 crores based on 2% of the five-day average. This ensures that both institutional and retail investors can execute positions without significant market impact.

Options Expiry Patterns and Strategic Implications

The expiry date of 24 February 2026 is attracting concentrated activity, with call options at strikes well above the current market price. This pattern often reflects a mix of hedging and speculative strategies, where traders seek leveraged exposure to potential upside while limiting downside risk.

Open interest data reveals that the ₹3,000 strike has amassed 18,696 contracts, suggesting that many investors expect the stock to test or surpass this level within the next two weeks. Similarly, the ₹2,900 and ₹2,800 strikes have open interests of 7,774 and 8,266 contracts respectively, reinforcing the bullish bias in the options market.

However, the disparity between the underlying price and these strike prices also indicates that these positions carry significant risk if the stock fails to rally. Investors should weigh the potential rewards against the volatility and sector headwinds currently facing TCS.

Investor Takeaways and Outlook

For investors, the current scenario presents a nuanced picture. The bearish price action and technical weakness caution against aggressive buying at present. Yet, the robust call option activity at elevated strike prices signals that some market participants are optimistic about a near-term recovery or a technical bounce.

Given TCS’s large-cap status, strong dividend yield, and recent Mojo Grade upgrade to Hold, long-term investors may consider accumulating on dips, provided the broader IT sector stabilises. Traders, meanwhile, might find opportunities in the options market to capitalise on volatility and directional bets, especially with the 24 February expiry approaching.

Ultimately, monitoring sector trends, quarterly earnings updates, and global IT demand indicators will be critical to realising the stock’s potential. The divergence between spot price weakness and options market optimism underscores the importance of a balanced, data-driven approach to investment decisions in TCS.

Summary of Key Metrics

• Current stock price: ₹2,626 (underlying value)
• 52-week low: ₹2,585
• Market cap: ₹9,95,662 crores
• Dividend yield: 3.96%
• Mojo Score: 51.0 (Hold)
• Recent 3-day return: -12.74%
• Sector 1-day return: -4.41%
• Sensex 1-day return: -0.98%

• Most active call strikes (24 Feb 2026 expiry): ₹2,600, ₹2,700, ₹2,800, ₹2,900, ₹3,000
• Highest open interest: ₹3,000 strike with 18,696 contracts
• Largest turnover: ₹2,600 strike with ₹1,244.49 lakhs

Investors should remain vigilant and consider both technical and fundamental factors before making decisions, as the interplay between stock weakness and options market optimism creates a complex trading environment.

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