Varun Beverages Ltd Sees Heavy Call Option Activity Amid Volatile Trading

Call Option Activity Highlights

On 3 February 2026, Varun Beverages witnessed an extraordinary volume of 17,739 call option contracts traded at the ₹500 strike price, with a turnover amounting to ₹1592.52 lakhs. The open interest for these contracts stands at 7,245, indicating sustained interest and commitment from market participants ahead of the 24 February expiry. The underlying stock price at the time was ₹451.85, suggesting that traders are positioning for a substantial upside move of over 10% within the next three weeks.

The concentration of call options at the ₹500 strike price, which is approximately 10.7% above the current market price, underscores a bullish sentiment. This is particularly noteworthy given the stock’s recent price action and technical indicators.

Price Performance and Volatility

Varun Beverages has experienced a challenging trading environment recently. The stock has declined for three consecutive sessions, losing 4.22% over this period. On 3 February, it underperformed its sector by 2.61%, closing down 2.85% against the sector’s 0.68% fall and the Sensex’s 2.64% gain. Intraday volatility was pronounced, with the stock swinging between a low of ₹440.60 (-5.51%) and a high of ₹492.15 (+5.54%), resulting in a wide trading range of ₹51.55.

Despite opening the day with a gap up of 2.72%, the weighted average price suggests that most volume traded closer to the lower end of the day’s range, indicating selling pressure. The stock is currently trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling a bearish technical setup in the short to medium term.

Investor participation has also waned, with delivery volumes on 2 February falling by 28.72% compared to the five-day average, suggesting reduced conviction among long-term holders. However, liquidity remains adequate, with the stock capable of supporting trade sizes up to ₹5.92 crore based on recent average traded value.

Mojo Score and Analyst Ratings

Varun Beverages currently holds a Mojo Score of 50.0, placing it in the 'Hold' category. This represents an upgrade from its previous 'Sell' rating as of 26 November 2025. The market cap grade is 1, reflecting its status as a large-cap stock with a market capitalisation of ₹1,60,222 crore. While the upgrade signals some improvement in fundamentals or sentiment, the overall score suggests cautious optimism rather than a strong buy recommendation.

The recent downgrade in price performance and technical weakness contrasts with the bullish option positioning, indicating a divergence between short-term market sentiment and longer-term investor views. Traders appear to be speculating on a rebound, possibly anticipating positive catalysts or a technical correction.

Expiry Patterns and Strike Price Concentration

The expiry date of 24 February 2026 is less than three weeks away, making the current option activity particularly relevant for near-term price movements. The heavy open interest at the ₹500 strike price suggests that traders expect the stock to approach or surpass this level before expiry to profit from these call options.

Such concentrated activity at a single strike price often precedes significant price action, as market makers and institutional investors adjust their hedges and positions. The elevated open interest also implies potential for increased volatility as expiry approaches, with the stock price likely to gravitate towards the strike price with the highest open interest.

Sector and Market Context

Within the beverages sector, Varun Beverages has underperformed peers and the broader market recently. The sector itself has seen modest declines, but the Sensex’s positive return of 2.64% on the same day highlights the stock’s relative weakness. This underperformance may be attributed to profit booking, sector rotation, or company-specific concerns.

However, the large volume of call options traded and the open interest build-up indicate that some investors are positioning for a turnaround. This could be driven by expectations of improved earnings, favourable regulatory developments, or seasonal demand upticks in the beverages industry.

Implications for Investors and Traders

The pronounced call option activity at a strike price significantly above the current market level suggests that traders are anticipating a meaningful price recovery in Varun Beverages over the coming weeks. This bullish positioning contrasts with the recent price weakness and technical downtrend, highlighting a potential divergence between short-term market sentiment and option market expectations.

Investors should monitor the stock’s price action closely as the 24 February expiry approaches, particularly watching for any signs of a breakout above key resistance levels near ₹480-₹490. A sustained move towards or beyond the ₹500 strike price would validate the bullish option bets and could trigger further buying interest.

Conversely, failure to gain traction could result in the call options expiring worthless, leading to a potential unwinding of bullish positions and increased selling pressure. Given the stock’s high intraday volatility and recent underperformance, risk management remains crucial for traders engaging with these options.

Technical and Fundamental Outlook

From a technical perspective, Varun Beverages faces resistance at multiple moving averages, all currently above the prevailing price. The stock’s inability to hold gains despite an opening gap up and the weighted average price clustering near the day’s low indicate selling pressure. However, the large open interest in call options suggests that some market participants expect a reversal.

Fundamentally, the recent upgrade from 'Sell' to 'Hold' by MarketsMOJO reflects a stabilisation in the company’s outlook, though the Mojo Score of 50.0 indicates that the stock is not yet a clear buy. Investors should weigh these factors alongside sector trends and broader market conditions before making decisions.

Overall, the interplay between heavy call option activity and recent price volatility makes Varun Beverages a stock to watch closely in the near term, particularly for those interested in derivatives trading or tactical equity positions.

Conclusion

Varun Beverages Ltd’s recent surge in call option volumes at the ₹500 strike price expiring in late February highlights a strong bullish sentiment among traders despite the stock’s recent price weakness and technical challenges. The elevated open interest and turnover in these contracts suggest expectations of a significant price recovery within weeks. However, the stock’s underperformance relative to its sector and the broader market, combined with high volatility and declining investor participation, warrant caution.

Investors and traders should closely monitor price movements and option market dynamics as expiry approaches, balancing the potential for upside against the risks inherent in a volatile and technically weak environment.

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