Tata Consultancy Services Sees Heavy Put Option Activity Ahead of December Expiry

Put Option Activity Concentrated Near Current Levels

Data from the derivatives market highlights that put options with strike prices close to the current underlying value of ₹3,312 have witnessed significant volumes. The 30 December 2025 expiry date features prominently, with three key strike prices—₹3,260, ₹3,200, and ₹3,300—registering substantial contract trades.

The ₹3,300 strike price leads in turnover, with approximately ₹189.58 lakhs worth of contracts traded across 3,320 contracts. This is followed by the ₹3,200 strike, which saw 2,862 contracts traded generating turnover of ₹32.25 lakhs, and the ₹3,260 strike with 2,277 contracts traded and turnover of ₹68.10 lakhs. Open interest figures also underscore the prominence of these strikes, with the ₹3,200 strike holding the highest open interest at 3,708 contracts, suggesting sustained investor interest in this level.

Such concentration of put option activity near the current stock price often indicates a hedging stance by investors or a cautious outlook on the stock’s near-term trajectory. The clustering of open interest and trading volumes around these strikes suggests that market participants are positioning for potential downside risk or seeking protection against volatility as the expiry date nears.

Stock Performance and Market Context

Despite the active put option trading, Tata Consultancy Services has demonstrated resilience in the cash market. The stock has outperformed its sector by 0.36% on the day, with a one-day return of 0.98% compared to the sector’s 0.53% and the Sensex’s 0.57%. Over the past three consecutive trading sessions, TCS has recorded a cumulative gain of 3.28%, reflecting steady investor confidence.

The stock’s price movement has been confined within a narrow range of ₹27, indicating relatively stable trading conditions. Furthermore, TCS is trading above its key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—signalling a generally positive technical backdrop. This technical strength contrasts with the heightened put option activity, suggesting that investors may be balancing optimism with prudent risk management.

Investor participation has also shown signs of strengthening, with delivery volumes on 18 December reaching 12.27 lakh shares, a 29.73% rise compared to the five-day average delivery volume. This increase in delivery volume points to growing conviction among shareholders and possibly institutional investors.

Dividend Yield and Liquidity Considerations

Tata Consultancy Services currently offers a dividend yield of 3.9% at prevailing prices, which may be attractive to income-focused investors within the large-cap segment. The stock’s liquidity profile supports sizeable trades, with the average traded value over five days sufficient to accommodate trade sizes of approximately ₹11.23 crore based on 2% of the average volume. This liquidity ensures that investors can enter or exit positions with relative ease, an important factor when considering option strategies and hedging.

Interpreting the Put Option Interest

The pronounced put option activity at strike prices slightly below and near the current market price suggests a cautious stance among market participants. Put options serve as a tool for hedging existing long positions or speculating on potential declines. The open interest concentration at ₹3,200 and ₹3,260 strikes indicates that investors may be seeking downside protection in the event of a pullback, while the high turnover at ₹3,300 strike could reflect active trading and repositioning ahead of expiry.

Expiry patterns also play a role in option market dynamics. The 30 December 2025 expiry is the nearest monthly expiry, often prompting increased activity as traders adjust positions to manage risk or capitalise on short-term price movements. The clustering of put option trades around this date highlights the importance of monitoring price action and volatility in the coming days.

Sector and Market Capitalisation Context

Tata Consultancy Services operates within the Computers - Software & Consulting industry, a sector characterised by rapid technological evolution and competitive pressures. With a market capitalisation of approximately ₹11,98,636.21 crore, TCS ranks among the largest companies in its sector, reflecting its dominant position and broad investor interest.

The stock’s recent performance relative to the sector and benchmark indices suggests that it remains a key player in the market landscape. However, the active put option interest signals that investors are mindful of potential volatility or sector-specific headwinds as the year-end approaches.

Outlook and Investor Considerations

Investors analysing Tata Consultancy Services should weigh the stock’s steady gains and technical strength against the evident hedging activity in the options market. The presence of significant put option volumes near current price levels may indicate a prudent approach to risk management, especially given the proximity of the December expiry.

Market participants may consider monitoring open interest trends and price movements closely in the coming sessions to gauge shifts in sentiment. The balance between bullish momentum in the cash market and bearish positioning in the options market underscores the nuanced outlook prevailing among investors.

Conclusion

Tata Consultancy Services continues to command significant attention in both the cash and derivatives markets. The heavy put option activity ahead of the 30 December 2025 expiry highlights a cautious stance among investors, potentially reflecting hedging strategies or anticipation of near-term price corrections. Meanwhile, the stock’s performance metrics and technical indicators suggest underlying strength within a large-cap framework. As expiry approaches, the interplay between these factors will be critical for investors seeking to navigate the evolving market environment.

Only Rs. 14,999 - Get MojoOne + Stock of the Week for 1 Year PLUS 18 Months FREE! Start Saving Now →