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

Robust Put Option Volumes Signal Bearish Positioning

On 6 February 2026, Tata Motors Passenger Vehicles Ltd witnessed substantial put option trading, with the highest activity clustered around strike prices of ₹370, ₹360, ₹350, ₹375, and ₹380. The most heavily traded put contract was at the ₹370 strike, where 6,772 contracts changed hands, generating a turnover of ₹431.24 lakhs and an open interest of 4,347 contracts. This was closely followed by the ₹360 strike with 4,870 contracts traded and an open interest of 3,462, and the ₹350 strike with 4,012 contracts traded and the highest open interest of 3,723 contracts.

The underlying stock price stood at ₹378.85, indicating that the bulk of put option activity is concentrated slightly below or near the current market price. This pattern typically reflects investors’ expectations of potential downside or a desire to hedge existing long positions against adverse price movements.

Expiry Date Concentration and Market Implications

All the active put options share the same expiry date of 24 February 2026, underscoring a near-term focus on risk management and directional bets. The clustering of open interest and turnover around this expiry suggests that market participants are positioning themselves ahead of key events or earnings announcements expected in the coming weeks.

Given the expiry is less than three weeks away, the elevated put volumes could also indicate speculative bearish bets or protective hedging by institutional investors wary of volatility in the automobile sector, which has seen mixed signals recently.

Stock Price Action and Technical Context

Despite the heavy put option activity, Tata Motors Passenger Vehicles Ltd outperformed its sector by 1.11% on the day, registering a modest 0.76% gain compared to the sector’s 0.44% decline and the Sensex’s 0.41% fall. However, the stock opened with a gap down of -2.45%, reflecting early bearish pressure before recovering intraday to touch a high of ₹381.8, a 2.04% increase, and a low of ₹361, down 3.51%.

The weighted average price of traded shares was closer to the day’s low, indicating that most volume was executed near the lower price range, which aligns with the cautious sentiment seen in options markets. Moving averages show the stock trading above its 5-day, 20-day, and 50-day averages but below the 100-day and 200-day averages, suggesting a mixed technical outlook with potential resistance at longer-term levels.

Investor Participation and Liquidity Considerations

Investor participation has shown signs of decline, with delivery volumes falling by 6.7% to 64.35 lakh shares on 5 February compared to the five-day average. Nonetheless, liquidity remains adequate, with the stock’s traded value supporting trade sizes up to ₹10.76 crore based on 2% of the five-day average traded value, ensuring that institutional and retail investors can execute sizeable trades without significant market impact.

Mojo Score and Analyst Ratings

Tata Motors Passenger Vehicles Ltd currently holds a Mojo Score of 41.0, categorised as a Sell, reflecting a downgrade from a previous Hold rating on 4 November 2024. The company’s market capitalisation stands at a robust ₹1,37,774 crore, classifying it as a large-cap stock within the automobile sector. The downgrade and low Mojo Grade underscore the cautious stance analysts have adopted amid the prevailing market conditions and sector headwinds.

Put Option Strike Price Distribution and Investor Strategy

The distribution of put option volumes across strike prices from ₹350 to ₹380 reveals a layered hedging or bearish strategy. The highest open interest at ₹350 (3,723 contracts) and ₹370 (4,347 contracts) suggests that investors are particularly focused on downside protection in the ₹350-₹370 range, which is approximately 5-8% below the current market price. This range may represent critical support levels or price points where investors anticipate increased volatility or downside risk.

Meanwhile, the significant turnover at the ₹375 and ₹380 strikes, despite lower open interest, indicates active trading and possibly speculative positioning closer to the money. Such activity often precedes volatility spikes as expiry approaches, with traders adjusting their positions based on evolving market sentiment and news flow.

Broader Market and Sector Context

The automobile sector has been navigating a complex environment characterised by fluctuating demand, supply chain challenges, and evolving regulatory frameworks. Tata Motors Passenger Vehicles Ltd, as a key player, is subject to these pressures, which are reflected in its mixed technical indicators and cautious investor positioning.

Put option activity often serves as a barometer for market sentiment, and the current elevated volumes at multiple strike prices suggest that investors are bracing for potential downside or increased volatility in the near term. This could be driven by macroeconomic factors, upcoming earnings results, or sector-specific developments such as changes in consumer preferences or input cost inflation.

Investor Takeaways and Outlook

For investors, the heavy put option activity in Tata Motors Passenger Vehicles Ltd signals a need for vigilance. The concentration of open interest below the current market price highlights key support zones to monitor, while the stock’s recent outperformance relative to its sector suggests some resilience amid broader market weakness.

Those holding long positions may consider protective strategies such as buying puts or employing collars to mitigate downside risk ahead of the 24 February expiry. Conversely, speculative traders might view the elevated put volumes as an opportunity to capitalise on potential volatility spikes or price corrections.

Given the company’s current Mojo Grade of Sell and the recent downgrade, a cautious approach is warranted until clearer directional cues emerge from price action and fundamental developments.

Conclusion

The surge in put option trading for Tata Motors Passenger Vehicles Ltd ahead of the February expiry underscores a market environment marked by uncertainty and hedging activity. With significant open interest and turnover concentrated at strike prices below the current market level, investors are signalling a guarded outlook for the stock in the near term. Monitoring these option market dynamics alongside technical and fundamental indicators will be crucial for making informed investment decisions in this large-cap automobile stock.

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