SMH enters September with a notable split: short sellers have been quietly rebuilding positions through August, even as options traders are unwinding the defensive hedges they carried through most of the summer.
The short-side rebuild is the clearest story here. Short interest climbed to 13.8% of the float on September 1, up 5.2% on the week and sitting near the top of its recent range. That marks a sharp reversal from the late-July peak above 17 million shares, when SI hit its highest level of the rolling 30-day window before a steep unwind through mid-August brought it down to around 11.6 million shares. The past two weeks have seen a steady grind back higher. Borrow costs remain low at 0.94%, essentially unchanged on the week, so the rebuild reflects deliberate positioning rather than a forced or squeezed market. Availability has tightened meaningfully, though — dropping to roughly 75% from around 113% a week ago, meaning the lending pool is now considerably more used up than it was just days earlier. The 52-week low for availability was 5.7%, so there is room to tighten further, but the direction of travel this week is notable.
Options positioning tells the opposite story. Put/call hedging has been unwinding steadily for nearly six weeks. The PCR hit 1.65 on September 1, more than 1.6 standard deviations its 20-day average of 1.84. Back in late July, the ratio was running above 3.0 — among the most defensively skewed readings of the past year. The steady compression since then points to options traders growing less anxious, even as short sellers were adding. That divergence between the two markets — shorts rebuilding while put buyers step back — is the core tension in SMH this week.
The ORTEX short score reflects the ambiguity. At 64.8, it has been remarkably stable for the past two weeks, barely moving between 63.3 and 64.8 through the entire August rebuilding phase. That stability suggests the broader model is reading the current setup as elevated but not extreme — the score has not broken in either direction despite the 5% weekly rise in shares short. The absence of a meaningful directional signal from the score underlines that this is a market in tension rather than one with clear momentum.
On the institutional side, the ownership picture is dominated by market-making and large-bank positions typical of a liquid ETF. Goldman Sachs added over 3.3 million shares in Q2, making it the second-largest holder at 14.4% of shares. Susquehanna added 1.2 million shares and Barclays added 870,000 over the same period. The Goldman build is the most eye-catching — though for an ETF of this liquidity, large bank positions often reflect hedging or facilitation activity rather than directional conviction.
The next focal point is whether the short rebuild accelerates or stalls as the week unfolds, with availability tightening and the PCR continuing to compress toward its annual low near 0.54 — those two gauges moving in opposite directions will be the clearest signal of which camp, the short sellers or the options desk, is reading the chip sector correctly.
See the live data behind this article on ORTEX.
Open SMH 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.
