Tata Steel Ltd Sees Surge in Call Option Activity Amid Bullish Momentum

Surge in Call Option Trading Highlights Investor Optimism

The most active call option for Tata Steel Ltd is the January 27 expiry with a strike price of ₹190. On this contract, a substantial 13,975 contracts were traded, generating a turnover of ₹2,436.54 lakhs. Open interest stands at 2,765 contracts, reflecting sustained investor interest and positioning ahead of the expiry date. The underlying stock price currently trades at ₹188.70, just shy of the strike price, indicating a near-the-money call option preference among traders.

This elevated call option activity suggests that market participants are positioning for further upside in Tata Steel’s share price over the short term. The strike price of ₹190 aligns closely with the stock’s recent intraday high, reinforcing expectations of a breakout or continued upward momentum.

Technical and Fundamental Backdrop Supports Bullish Positioning

Tata Steel’s price action has been notably strong, with the stock trading above all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling a robust uptrend. On 14 January 2026, the stock gained 3.81%, outperforming the ferrous metals sector by 1.36% and the Sensex by 3.64 percentage points. This relative strength underscores growing investor confidence in the company’s prospects.

Despite a recent decline in delivery volume to 80.14 lakh shares on 13 January, down 35.05% against the five-day average, liquidity remains ample with an average traded value supporting trade sizes up to ₹9.66 crore. This ensures that the stock remains accessible for institutional and retail investors alike, facilitating active participation in both the cash and derivatives markets.

Strong Buy Rating and Upgraded Mojo Grade Reflect Positive Outlook

MarketsMOJO assigns Tata Steel Ltd a Mojo Score of 84.0, categorising it as a Strong Buy. This represents an upgrade from the previous Buy rating as of 1 January 2026, reflecting improved fundamentals and technical strength. The company’s market capitalisation stands at a commanding ₹2,31,882 crore, placing it firmly in the large-cap segment with a Market Cap Grade of 1, indicating high stability and investor trust.

Such a rating upgrade often attracts further institutional interest, which can amplify price momentum and option market activity. The strong Mojo Score also factors in Tata Steel’s operational performance, sector positioning, and valuation metrics, providing a comprehensive endorsement of its investment appeal.

Sector Context and Comparative Performance

Within the ferrous metals sector, Tata Steel’s recent performance stands out. The stock’s one-day return of 3.34% on 14 January 2026 notably outpaced the sector’s 1.99% gain and the Sensex’s modest 0.17% rise. This relative outperformance highlights Tata Steel’s leadership position and resilience amid sectoral volatility.

Ferrous metals have been subject to cyclical demand pressures, influenced by global steel consumption trends and raw material cost fluctuations. Tata Steel’s ability to sustain upward momentum despite these headwinds speaks to its operational efficiency and strategic initiatives, including capacity expansions and cost optimisation.

Expiry Patterns and Option Market Implications

The concentration of call option volume at the ₹190 strike price for the 27 January expiry suggests a consensus expectation that the stock will breach or hold above this level in the near term. Traders utilising call options at this strike are effectively expressing a bullish view with limited capital outlay compared to outright stock purchases.

Open interest of 2,765 contracts at this strike also indicates that many investors are holding positions, potentially anticipating a price rally or hedging existing exposures. The option turnover of ₹2,436.54 lakhs further confirms active trading and liquidity in the derivatives segment, which can lead to increased volatility and price discovery as expiry approaches.

Risks and Considerations for Investors

While the bullish signals are compelling, investors should remain mindful of potential risks. The recent decline in delivery volumes may indicate some hesitation among long-term holders, and steel sector dynamics remain sensitive to global economic conditions, trade policies, and commodity price swings.

Moreover, the proximity of the stock price to the call strike price means that any adverse news or profit-taking could quickly impact option premiums and stock valuations. As expiry nears, option sellers may also adjust positions, influencing price movements.

Outlook and Strategic Takeaways

Given the strong technical positioning, upgraded Mojo rating, and active call option interest, Tata Steel Ltd appears poised for further gains in the near term. Investors with a bullish outlook may consider leveraging call options to capitalise on expected upside while managing risk exposure.

Long-term investors should monitor sector developments and company earnings updates closely, as these will influence sustained momentum. The stock’s large-cap status and market leadership provide a degree of stability, but cyclical risks inherent to the ferrous metals industry remain relevant.

Overall, the convergence of fundamental strength and derivative market activity paints a positive picture for Tata Steel Ltd as it approaches the January expiry, making it a key stock to watch for traders and investors alike.

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