Tata Motors Passenger Vehicles Sees Surge in Call Option Activity Ahead of March Expiry

Strong Call Option Interest at Key Strike Prices

Data from the derivatives market reveals that call options with strike prices of ₹390 and ₹400 have emerged as the most actively traded contracts for Tata Motors Passenger Vehicles Ltd. Specifically, the ₹400 strike call option recorded 8,927 contracts traded, generating a turnover of ₹559.19 lakhs and an open interest of 4,404 contracts. Meanwhile, the ₹390 strike call option saw 5,952 contracts traded, with a turnover of ₹569.49 lakhs and an open interest of 2,415 contracts.

This heightened activity at strikes just above the current underlying value of ₹389.0 indicates that traders are positioning for a rally beyond the current price level. The concentration of open interest at these strikes also suggests that market participants expect the stock to breach these levels by expiry, reflecting a moderately bullish outlook.

Underlying Stock Performance and Technical Context

Tata Motors Passenger Vehicles Ltd has outperformed its sector by 1.81% today, with a 1-day return of 1.95% compared to the sector’s 0.54% and the Sensex’s 0.21%. The stock has been on a two-day consecutive gain streak, delivering a 3.4% return over this period. Intraday, the stock touched a high of ₹390.8, marking a 2.34% increase on the day.

From a technical perspective, the stock is trading above its 5-day, 20-day, 50-day, and 100-day moving averages, signalling short- to medium-term strength. However, it remains below the 200-day moving average, indicating that longer-term momentum has yet to fully confirm a sustained uptrend. This mixed technical picture may explain the cautious optimism reflected in the call option activity.

Investor participation has shown some signs of moderation, with delivery volume on 25 February falling by 12.76% to 39.8 lakh shares compared to the 5-day average. Despite this, liquidity remains robust, with the stock’s traded value supporting trade sizes of up to ₹6.49 crore comfortably.

Mojo Grade Downgrade and Market Cap Considerations

Despite the recent positive price action and call option interest, Tata Motors Passenger Vehicles Ltd’s Mojo Score stands at 41.0, with a Mojo Grade of Sell, downgraded from Hold on 4 November 2024. This downgrade reflects concerns over the company’s fundamental outlook and valuation metrics, which may temper enthusiasm among long-term investors.

The company is classified as a Large Cap with a market capitalisation of ₹1,41,551 crore, but it holds a Market Cap Grade of 1, indicating limited upside potential relative to its size and sector peers. This dichotomy between derivatives market optimism and fundamental caution highlights the nuanced view investors are taking on TMPV.

Expiry Patterns and Implications for Traders

The expiry date of 30 March 2026 is less than five weeks away, a period during which option traders often adjust positions to capitalise on expected price moves or hedge existing exposures. The concentration of call option volume and open interest at the ₹390 and ₹400 strikes suggests that traders are anticipating a breakout above these levels, potentially driven by upcoming corporate developments, sectoral tailwinds, or broader market momentum.

Given the stock’s recent outperformance relative to the automobile sector and the Sensex, the derivatives market appears to be pricing in a continuation of this trend. However, the relatively high open interest at these strikes also implies that a significant number of traders may look to unwind or roll over positions if the stock fails to breach these levels by expiry.

Investor Sentiment and Risk Factors

While the call option activity signals bullish positioning, investors should remain mindful of the risks inherent in Tata Motors Passenger Vehicles Ltd’s current profile. The downgrade to a Sell grade by MarketsMOJO underscores concerns about earnings growth sustainability, competitive pressures in the automobile sector, and potential macroeconomic headwinds.

Moreover, the stock’s failure to surpass its 200-day moving average suggests that longer-term resistance remains a hurdle. Investors relying solely on derivatives market signals should weigh these factors carefully and consider a balanced approach that incorporates both technical and fundamental analysis.

Conclusion: Weighing Derivatives Optimism Against Fundamental Caution

The surge in call option activity for Tata Motors Passenger Vehicles Ltd ahead of the 30 March 2026 expiry reflects a clear bullish sentiment among derivatives traders, particularly at the ₹390 and ₹400 strike prices. This optimism is supported by recent price gains and outperformance relative to the automobile sector and broader market indices.

However, the downgrade in Mojo Grade to Sell and the stock’s inability to clear its 200-day moving average temper this enthusiasm. Investors should consider the mixed signals from technical indicators, fundamental metrics, and derivatives positioning before making allocation decisions.

For traders, the coming weeks will be critical in determining whether Tata Motors Passenger Vehicles Ltd can sustain its momentum and validate the bullish bets embedded in the options market. Monitoring open interest changes, volume trends, and price action around key strike prices will provide valuable insights into the stock’s near-term trajectory.

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