FDN, the First Trust Dow Jones Internet Index Fund, enters the back half of August with a notable split in its positioning signals — short sellers have doubled their bets over the past month, yet options traders are becoming measurably less defensive.
The most striking development in the lending market is how much short interest has moved in absolute terms. Shares short have roughly doubled over the past 30 days, rising 114% to reach 1.3% of float. On a weekly basis, the move is even sharper — up 93% in the past week alone, driven by a jump from around 175,000 shares to over 350,000. That said, context matters here: 1.3% of float remains low in absolute terms, and borrow conditions are nowhere near stressed. Availability is running at 308%, meaning roughly three shares are sitting idle in the lending pool for every one already borrowed. Cost to borrow has edged up 64% over the past month to 3.36%, but that reflects a move from a cheap starting point — it remains well within normal range for an ETF. The borrow market is not flashing distress; the doubling of short interest looks more like a tactical hedge being rebuilt after a period of low activity than any aggressive directional bet.
The options picture tells a different story, and it's worth pausing on the contrast. The put/call ratio for FDN is structurally elevated — at 4.55, it sits near the top of its 52-week range of 0.20 to 5.07. But the direction of travel is toward less defensive positioning, not more. The ratio has drifted down from its 52-week peak of 5.07 hit on July 20 and now runs roughly 1.3 standard deviations its own 20-day average of 4.69. In plain terms, options participants have been systematically adding put coverage for months, but the pace of that hedging is now slowing. That's a nuanced read — the market is still heavily skewed toward downside protection, but the intensity is fading.
The ORTEX short score for FDN is a middling 42, broadly consistent with a fund that carries real but not extreme bearish positioning. The score has been choppy through August, swinging between 32 and 50 over the past two weeks, which reflects the volatile day-to-day moves in shares short rather than a clean directional trend. There are no earnings events to anchor the view — FDN is an ETF, so the relevant catalysts come from its underlying holdings, which include heavily-owned internet and e-commerce names. The fund is down 2.3% on the week and up 5.2% over the past month, suggesting it gave back some of a recent rally. The ORTEX short score volatility and the soft weekly return are aligned: internet equity sentiment has turned cautious without tipping into outright bearish conviction.
The key variable worth tracking from here is whether the rebuilding short position accelerates further or stabilises. If the shares-short count keeps climbing while the put/call ratio continues to ease, it would suggest a rotation from options-based hedging toward a more direct short approach — a meaningful shift in how market participants are expressing their caution on the internet sector.
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