UMC has spent the past week unwinding the extremes flagged in our July 9 note — borrow costs have collapsed, short sellers have retreated further, and availability has loosened — yet the options market has not fully relaxed, leaving a quiet tension heading into next month's earnings.
The most dramatic reversal is in the lending market. Cost to borrow peaked at 25.1% on July 8, a record on ORTEX data. It has since crashed back to 1.5% — roughly where it was before the spike, and down 64% on the week. Availability has swung with it, easing from the 211% reading on July 8 back to 133% now, still firmly in "normal" territory with more than one share available for every one borrowed. The borrow market has normalised entirely. Whatever forced the prime broker repricing six days ago has cleared.
Short interest tells the same story of retreat. Estimated short positions have fallen 17% over the week to 22.8 million shares, extending a decline that began in early July from a peak near 29.5 million in early June — a 23% drop in roughly six weeks. The ORTEX short score has eased to 44.2, near the low end of its recent range, and the short score percentile rank sits at 60 — neither extreme. Positioning looks notably lighter rather than stubbornly crowded.
Options are the one signal that has not fully normalised. The put/call ratio has drifted higher all week, reaching 0.41 on Tuesday — nearly two standard deviations above its 20-day average of 0.29, and the most defensive reading since the metric spiked above 1.0 in late 2025. Calls still outnumber puts by more than two to one, so the options market is not bearish in absolute terms. But the direction of travel — steadily rising PCR through June and into July — suggests investors are adding downside protection into the July 29 earnings date rather than pressing longs uncovered.
The earnings setup carries real weight here. The April print was violent: UMC moved 12% higher on the day and 31% over the following five sessions — the strongest single-quarter reaction in recent history. The February print was the mirror image, down 5.7% on the day and nearly 10% over five days. With Q2 results due July 29 and a recent note citing 12.3% quarter-on-quarter revenue growth and raised full-year guidance, bulls have a fundamental case. Macquarie reinstated coverage with an Outperform rating on July 15, the most recent analyst action and the first positive reinstatement in over a year. Other major house moves — downgrades from Morgan Stanley, JPMorgan, and Goldman Sachs — date to late 2024 and should be treated as stale backdrop rather than current signal. The mean price target of $7.78 in the database is clearly a legacy figure referencing the Taiwan Stock Exchange listing, not the $23.84 ADR price; it is not a useful reference.
BlackRock added 132 million shares in the period through June 30, lifting its stake to 7.6% of shares outstanding — the largest single institutional position and a material addition that suggests at least one large passive-to-active player is building rather than trimming. With borrow conditions calm, short interest deflating, and a fresh Outperform reinstatement from Macquarie, the July 29 print becomes the next real test of whether the April rally was the start of something or a one-quarter event.
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