CRAK Borrow Market Tightens as Put Demand Spikes

CRAK, the VanEck Oil Refiners ETF, is drawing unusual attention from options traders and short sellers simultaneously — a pairing that doesn't often appear in ETF land.

The most striking development this week is in options positioning. Put demand has climbed sharply relative to calls, with the put/call ratio hitting 0.39 — more than two standard deviations above its 20-day average of 0.18. That z-score of 2.06 places current hedging demand near the highest level of the past year, approaching the 52-week PCR high of 0.47. To put the scale of the shift in context: the PCR was sitting below 0.09 as recently as mid-August. In six weeks, options traders have gone from heavily call-dominated to their most defensive posture in 12 months.

The short interest picture adds another layer of complexity. SI hit 26.3% of the free float on September 17 — genuinely elevated for any instrument, let alone an ETF tracking a narrow slice of the refining sector. That said, it has pulled back sharply from this week's high: SI fell 12.4% over the past seven days after peaking near 388,000 shares on September 11. A month ago, the figure was closer to 56,000 shares, meaning SI ballooned roughly five-fold between early August and mid-September before starting to unwind. The volatility in the series is notable — daily readings have swung between 160,000 and 388,000 shares just in the past two weeks, pointing to active repositioning rather than a stable structural short.

The borrow market has been equally turbulent. Availability tightened dramatically through August and into early September — dropping to near zero at the 52-week low — before loosening again. The current reading of 72% is well off that stressed level, and the week-on-week improvement of 115% confirms the lending pool has expanded as short interest pulled back. Cost to borrow, at 4.24%, is modest and broadly stable, having eased slightly from a high near 5.8% on August 25. The borrow market now looks considerably less charged than it did three weeks ago, even as SI remains elevated in percentage terms.

The ORTEX short score of 52 sits in roughly neutral territory, having pulled back from a week-high of 55.7 on September 11. That score is consistent with the directional story in the SI data: pressure was building into mid-September and is now easing, but not yet convincingly resolved. CRAK itself closed at $65.39 on September 18, down 1.6% on the day but roughly flat on the week — a 0.4% dip — after a strong 8.8% gain over the prior month. There is no active analyst coverage, no upcoming earnings event, and dividend data is stale (last distribution was in 2020), so the short and options positioning data are the primary signals here.

What to watch next: whether the put/call ratio, having reached a two-standard-deviation extreme, begins to normalise — or continues climbing toward the 52-week high — will be the clearest indicator of whether hedging demand around the refining sector is peaking or building further into year-end.