FDN, the First Trust Dow Jones Internet Index Fund, ends the week in a quieter but slightly less comfortable place than where it started — the options-hedge unwind that defined last week's story has plateaued, and the fund gave back ground on Tuesday.
The options angle remains the most interesting data point, but the narrative has shifted since the August 26 note. Then, the put/call ratio was dropping sharply toward 4.20, flagging the fastest unwind of defensive positioning in six weeks. That move has now largely stalled. The PCR closed Tuesday at 4.06 — still below its 20-day mean of 4.42, roughly 1.7 standard deviations on the light side — but the pace of the unwind has clearly slowed. Looking at the daily history, the ratio has barely moved all week, hovering between 4.06 and 4.19. Options traders have stopped adding protection at the pace they were in August, but they are not aggressively repositioning for upside either. The 52-week range of 0.20 to 5.07 puts the current reading in context: still structurally put-heavy, with the unwind paused rather than complete.
The lending market has quietly loosened further, and that is the one part of the positioning picture that has genuinely changed. Borrow availability has widened to roughly 579% — meaning nearly six shares are available to borrow for every one already shorted — up from around 540% a week ago and well above the tighter levels seen through most of August. Cost to borrow has also eased, falling 23% over the week to around 2.2%, its lowest reading since late July. That compares with a peak near 3.9% on August 11. Short interest itself ticked up 6.4% on the week to 1.4% of float — a continuation of the trend flagged in the previous note — but with borrow this plentiful and this cheap, the incremental short buildup looks opportunistic rather than urgent. The 52-week availability low of 7.3% serves as a reminder of how different the lending environment can look; right now it is nowhere near that pressure point.
The ORTEX short score sits at 36.9, broadly flat on the week and well below the mid-40s readings seen on August 19 and 24 when the borrow market was tighter. That compression is consistent with the easing availability picture — less stress in the lending pool, less signal from the short-score model. The score has oscillated between 30 and 47 over the past two weeks without establishing a clear direction, which itself reflects the fund's indecisive price action: up 4.5% over the past month but essentially flat on the week at $287.14, after a 1.8% drop on Tuesday.
As an ETF tracking the Dow Jones Internet Index, FDN has no earnings catalyst of its own. The next leg for the fund depends on how its underlying holdings — concentrated in large-cap internet names across e-commerce, cloud, and digital advertising — absorb whatever macro data arrives in the coming sessions. The pace of the options-hedge unwind resuming, or stalling further, will be worth tracking as the clearest real-time read on whether September brings a fresh risk-on move into internet names or a reassertion of the defensive positioning that dominated August.
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