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

Put Option Activity Highlights

The put options for Tata Motors Passenger Vehicles Ltd (TMPV) with a strike price of ₹340 expiring on 27 January 2026 have witnessed significant trading volumes. On 22 January 2026, a total of 3,883 contracts changed hands, generating a turnover of ₹41.63 lakhs. The open interest stands at 3,343 contracts, indicating sustained interest in downside protection or speculative bearish bets.

Given the underlying stock price of ₹348.7, the ₹340 strike puts are slightly out-of-the-money, suggesting that traders are positioning for a potential near-term correction or increased volatility. This activity is notable considering the stock’s recent outperformance of its sector by 1.9% and a two-day consecutive gain of 3.39%, reflecting a divergence between option market sentiment and spot price momentum.

Stock Performance and Technical Context

Tata Motors Passenger Vehicles Ltd, a large-cap automobile sector constituent with a market capitalisation of ₹1,24,886 crores, has shown mixed technical signals. The stock touched an intraday high of ₹349.6 on 21 January 2026, marking a 3.05% rise for the day. It currently trades above its 5-day moving average but remains below its 20-day, 50-day, 100-day, and 200-day moving averages, indicating a short-term bullish momentum within a longer-term consolidation or downtrend.

Investor participation appears to be waning, with delivery volumes falling by 5.48% compared to the five-day average, despite the stock’s recent gains. Liquidity remains adequate, with the stock’s traded value supporting a trade size of approximately ₹7.97 crores based on 2% of the five-day average traded value, ensuring that option and equity trades can be executed without significant market impact.

Mojo Score Downgrade and Market Implications

On 4 November 2024, Tata Motors Passenger Vehicles Ltd’s mojo grade was downgraded from Hold to Sell, with a current mojo score of 36.0. This downgrade reflects deteriorating fundamentals or technical outlook as assessed by MarketsMOJO’s proprietary scoring system. The market cap grade remains at 1, indicating a large-cap status but with limited quality or momentum signals.

The downgrade may have contributed to the increased put option activity as investors seek to hedge existing long positions or speculate on further downside. The bearish sentiment is underscored by the concentration of put contracts at the ₹340 strike, which is close to the current market price, suggesting a cautious stance ahead of the expiry.

Expiry Patterns and Investor Positioning

The expiry date of 27 January 2026 is approaching, and the heavy open interest in put options at the ₹340 strike price indicates that traders are actively positioning for potential price movements around this level. The open interest of 3,343 contracts represents a sizeable pool of investors either hedging downside risk or speculating on a decline below this strike.

Such activity often precedes increased volatility as expiry approaches, with the possibility of price swings driven by option unwinding or rollovers. Investors should monitor the stock’s price action closely in the coming days, especially given the mixed technical signals and recent delivery volume decline.

Sector and Benchmark Comparison

In comparison, the automobile sector recorded a 1.48% gain on the same day, while the Sensex rose by 0.96%. Tata Motors Passenger Vehicles Ltd outperformed both benchmarks with a 2.83% one-day return, highlighting its relative strength despite the bearish option positioning. This divergence suggests that while the broader market remains positive on the sector, option traders are more cautious or bearish on this specific stock.

Investors should weigh these contrasting signals carefully, considering both the underlying equity momentum and the option market’s implied caution.

Investor Takeaways and Outlook

The surge in put option activity at the ₹340 strike price for Tata Motors Passenger Vehicles Ltd signals a cautious or bearish stance among option traders, despite the stock’s recent short-term gains and outperformance of sector and benchmark indices. The downgrade in mojo grade to Sell further reinforces concerns about the stock’s near-term prospects.

Investors holding the stock should consider the implications of this bearish positioning, particularly as the 27 January expiry approaches. Hedging strategies may be prudent to mitigate downside risk, while those considering new positions should weigh the mixed technical signals and the potential for increased volatility.

Meanwhile, the automobile sector’s broader positive momentum suggests that Tata Motors Passenger Vehicles Ltd’s challenges may be company-specific rather than sector-wide. Continuous monitoring of open interest trends, delivery volumes, and price action will be essential to navigate the evolving market dynamics effectively.

Conclusion

In summary, Tata Motors Passenger Vehicles Ltd is currently the focal point of heavy put option trading, reflecting heightened bearish sentiment and hedging activity. The stock’s technical setup, mojo downgrade, and option market data collectively suggest a cautious outlook. Investors should remain vigilant and consider protective measures as the January expiry nears, balancing the stock’s recent gains against the risks implied by option market positioning.

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