MSOS Bears Exit in Force as Options Turn Bullish

Three signals on MSOS are pointing the same direction. Short sellers are retreating, borrowing costs have collapsed, and options traders are piling into calls.

The moves are sharp and simultaneous. That combination is worth paying attention to.

Short Sellers Cut and Run

SI % FF fell to 2.1% as of July 17. One week earlier it stood at roughly 6.9%. That is a 69.5% drop in seven days — one of the fastest unwinds in recent months.

The history makes it starker. Through most of June, short shares held above 10 million. By mid-July they had fallen to under 4 million. The unwind accelerated sharply after July 9.

The ORTEX short score has followed. It sat above 54 on July 6. By July 17 it had dropped to 42.7 — a meaningful shift in the aggregate short-pressure signal.

Borrow Market Opens Up

Cost to borrow fell to 0.13% on July 17. A week prior it was above 0.45%. Over the past month, CTB has dropped more than 81%.

Availability has moved the other way. It now stands at 227% — meaning more than two shares are available to borrow for every one currently on loan. That is a normal-to-loose lending environment. As recently as June 18, availability was below 37%.

The lending market has gone from tight to wide open in roughly four weeks.

Options Traders Turn Decisively Bullish

The put-call ratio hit 0.20 on July 17. That is 2.0 standard deviations below its 20-day mean of 0.23. It is the lowest PCR reading since early June.

In practical terms: for every put bought, five calls are being bought. The 52-week PCR range for MSOS runs from 0.09 to 0.32. The current reading is near the bullish end of that band.

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• SI % FF: 2.1% (July 17), down from ~6.9% one week prior; down ~66% over one month
• Short shares: ~3.9M (July 17) vs. ~12.7M on July 9
• ORTEX short score: 42.7 (July 17), down from 54.8 on July 6
• Cost to borrow: 0.13% (July 17), down 71% week-on-week
• Availability: 227% (July 17), up from ~37% in mid-June
• Put-call ratio: 0.20, z-score –2.0 vs. 20-day mean
• Price: $4.46 as of July 17, up 2.3% on the day but down 7.7% over one month