SMH has rallied hard this week — up 8.7% to $575.71 — and for the first time in months, the positioning data is moving in the same direction as the price.
The shift from last week's note is striking. Four days ago, the story was shorts pulling back while options traders stayed stubbornly defensive. That divergence has now closed. Short interest fell another 20% on the week to 13.8% of free float, continuing the unwind that began after shorts peaked at 17.7 million shares on July 27. The borrow market has loosened dramatically. Availability has jumped to 462%, up from 175% at the start of the week and a world away from the 52-week low of 5.7% hit on July 14. Cost to borrow has dropped nearly 30% on the week to just 0.73% — effectively negligible. Taken together, the lending market is now about as relaxed as it gets for a name that still carries nearly 14% short interest: plenty of supply, cheap to borrow, and fewer shorts in the pool than at any point in the past month.
Options positioning has finally caught up with the price action. The put/call ratio has collapsed to 1.86 — more than two standard deviations below its 20-day mean of 2.73. For a vehicle that has been carrying a PCR well above 2.5 for most of the past six weeks, this is a genuine sentiment flip. Put buyers dominated this ETF's options market through July, and that hedge demand is now unwinding alongside the short book. The PCR has room to travel further; the 52-week low is 0.54, and even at 1.86 this is still a market leaning more toward protection than aggression.
The ORTEX short score has dropped to 54 today, down from 63 at the start of the week and from a recent high of 67 on July 27. That decline reflects the combined move in short interest, availability, and cost to borrow — the composite signal has shifted from elevated bearish conviction to a more neutral read. A score in the mid-50s is not bullish, but it is no longer flashing the kind of pressure that warranted real attention three weeks ago.
JPMorgan remains the largest declared holder at roughly 6.5% of shares, having added meaningfully in the March quarter. The institutional picture is relatively dispersed beyond that, with no single active manager holding enough to move the needle on a fund of this size.
The key variable to watch now is whether the options market continues to unwind put positioning, or whether traders rebuild hedges into the next macro catalyst — with the PCR still well above its annual low, there is a meaningful gap between current sentiment and a genuinely bullish options setup.
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