XLC Options Sentiment Shifts as Short Unwind Matures

The XLC Communication Services ETF is sending a consistent message across three data streams. Bears have been retreating for weeks. Now options traders are joining that view.

Put-Call Ratio Hits a Notable Low

The put-call ratio dropped to 5.22 on July 24. That is the lowest reading in three weeks. The 20-day average sits at 7.30. At -2.0 standard deviations below that mean, this is a statistically significant shift in options positioning. Traders are buying fewer puts relative to calls than at any point in roughly a month.

This matters because the PCR has been persistently elevated. From late June through mid-July, it held above 8.0 on most days. The recent drop below 6.0 — and now below 5.5 — marks a change in character, not just a daily fluctuation.

The Broader Unwind in Context

The short position in XLC peaked near 9.4 million shares on June 25. It now stands at 5.9 million as of July 24. That is a decline of roughly 37% peak-to-trough. SI as a percentage of free float reads 2.6%.

As noted in the previous ORTEX article from July 22, the unwind had already looked like near-capitulation at that point. The data since then has continued in the same direction. Short interest fell another 1% on the day and 3% on the week since that note published. Cost to borrow has fallen 71% over the past month to just 0.61%. These are not the conditions of an active bear campaign.

Availability Has Pulled Back — But Remains Loose

One data point worth flagging: availability tightened sharply on July 24, dropping to 226% from 468% the prior session. That is still comfortably in "normal" territory — more than two shares available to borrow for every one lent out. The 52-week low on availability was 2.96%, recorded earlier this year when the borrow market was genuinely stressed. The current reading is nowhere near that level. The single-day tightening looks like noise rather than a trend reversal.

The ORTEX short score has nudged back up to 43.3, recovering from a low of 36.5 earlier in the week. That is worth monitoring. A sustained move back above 50 would suggest fresh bearish interest is rebuilding — but at present, the score remains well below the mid-50s readings that coincided with peak short positioning in June and early July.

What to Watch

Three signals now point the same direction: shrinking short interest, cheaper borrow, and a drop in put-call ratio to a three-week low. The outlier to watch is the short score tick higher. If availability continues to tighten alongside a rising short score, that would signal the unwind is finding a floor.

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• SI % of free float: 2.6% (July 24), down from ~4.1% at June 25 peak
• Cost to borrow: 0.61%, down 71% over one month
• Availability: 226% (normal range; 52-week low was 2.96%)
• PCR: 5.22, vs 20-day average of 7.30 (z-score: -2.0)
• ORTEX short score: 43.3 (July 24), up from 36.5 low on July 21