MUU Shorts Keep Covering as the 2X Bull ETF Extends Its Monster Run

MUU keeps squeezing the bears — up 17% on Thursday alone and 26% on the week — while short sellers continue to retreat from one of the tightest borrow markets on Nasdaq.

The covering story has accelerated. Short interest fell another 13% over the past week to 17.4% of free float, down from a peak above 20% in early June. That retreat is meaningful: shorts built aggressively through late May and the first half of June as the ETF's 144% monthly surge made it an attractive fade target. Now the covering is running in the opposite direction. The lending pool tells the same story from a different angle — availability has been near zero for most of the past two weeks, touching literally nil on multiple sessions between June 9 and June 12. Thursday's reading recovered slightly to just 5%, meaning fewer than one share is available for every twenty already lent out. Cost to borrow has eased from its May peak above 7% to around 4.7%, but with that much of the pool already committed, any fresh demand to short the fund faces an immediate supply constraint.

Options traders are not pressing hard against the rally either. The put/call ratio is running at 0.68, modestly above its 20-day average of 0.64 — roughly one standard deviation higher — but nowhere near the defensive extremes hit in mid-May when the PCR touched 0.97. The short score has also eased from around 65.5 earlier this month to 63.5, a mild softening that points to slightly less short-side pressure rather than a sharp reversal in sentiment.

The mechanical reality of a 2X daily-reset leveraged ETF matters here. MUU does not track Micron's cumulative return over time — it tracks twice the daily return of MU, resetting each night. A month of compounding gains from a volatile underlying has amplified returns well beyond 2X on a month-to-date basis. That same path dependency works in reverse: a prolonged choppy or declining stretch in MU would erode MUU faster than a simple 2X relationship implies.

What to watch next is whether short sellers, after two weeks of covering, re-engage if MU shows any sign of stalling — given how thin the borrow pool remains, any renewed demand to short MUU would likely hit immediate availability constraints and push cost to borrow sharply higher.