SOXL has staged a sharp reversal. The 3x semiconductor ETF is up 15% on the week. Yet options traders are the most bearish they have been all year. That tension is the story right now.
A week ago, short interest sat above 30 million shares. It has since fallen to 21.4 million — a 28.5% weekly decline. Rapid covering drove the move. Shorts that built positions during the sector's brutal July selloff are now unwinding them into the bounce.
SI as a % of free float stands at 6.3%. That is still elevated relative to mid-July levels near 4%, but the direction is clearly down.
The borrow market is also loosening. Availability has risen to 44% from a 52-week low of just 0.1% reached in late July. Cost to borrow has dropped 52% over the week to 5.6%. The acute squeeze pressure that defined late July is fading.
Options traders are not buying the rally. The put/call ratio hit 2.28 on August 6 — a 52-week high. The 20-day mean is 1.91. The z-score is 2.26, more than two standard deviations above recent norms.
This is a notable divergence. Shorts are covering. Options buyers are simultaneously adding the most downside protection they have all year. The two positioning signals are pointing in opposite directions.
For context: the previous ORTEX note on SOXL, published July 29 when the ETF was at $109, flagged a PCR near its then-peak of 2.0 and called it the most sustained bearish skew in 12 months. The PCR has since pushed past that level to 2.28 — a new 52-week high — even as the price has rallied 21% from those levels.
The ORTEX short score sits at 66.7, down from a recent peak of 71.2 on July 29. The direction of travel is lower, consistent with the covering activity. But at 66.7, the score still reflects meaningful short-side pressure relative to the broader market.
What to watch: Whether the PCR stays elevated or fades as the rally extends. A PCR holding near 2.3 while shorts continue to cover would suggest options traders expect the semiconductor bounce to stall.
See the live data behind this article on ORTEX.
Open SOXL on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
