PNQI, Invesco's NASDAQ Internet ETF, enters the final week of September with a striking split: short sellers are unwinding positions at pace, yet the cost of maintaining a borrow has more than doubled in a month.
The short-side retreat is the cleaner story. Short interest has fallen 25% over the past month, dropping to 1.5% of the float — a low reading for any ETF tracking large-cap internet names. The past week alone saw a 10% reduction in shares short, bringing the total to roughly 217,000 shares. At that level, there is simply not much bearish conviction to speak of. For an ETF that holds concentrated positions in cloud, e-commerce, and digital advertising names, the picture is one of disengagement rather than active hostility from the short side.
The borrow market tells a more complicated story. Cost to borrow has climbed to 2.2%, up 54% on the week and more than double where it was a month ago. That is an unusual move for a liquid ETF. What makes it odder still is that availability has simultaneously swung from very tight to relatively loose — availability now reads 290%, meaning nearly three shares are available to borrow for every one currently out on loan. Last Friday, September 18, availability had collapsed to just 29%, the lowest reading of the past 52 weeks. The reversal across two sessions is sharp. A brief but acute squeeze in the lending pool cleared quickly, leaving borrow costs elevated even as supply rebounded. The lending market looks unsettled rather than structurally stressed.
Options positioning adds a final layer to the divergence. Call flow has completely dominated this week — the put/call ratio has dropped to zero for the second consecutive session, nearly three standard deviations below its 20-day average of 0.12. In an ETF with thin options activity, a zero PCR reflects the near-total absence of protective put buying rather than a surge in speculative call buying, so the signal has limits. Still, the contrast with the mildly elevated downside hedging seen through August is real. Whatever caution existed in the options market a few weeks ago has retreated alongside the short positions.
The ORTEX short score has moved in a consistent direction. It slipped from 57 at mid-month to 48.6 on Tuesday, crossing back below the midpoint of the 0–100 range. The score had briefly climbed through the first half of September as the borrow squeeze pushed conditions tighter; now that availability has loosened, the score is reverting. Overall, the setup reads as a positioning washout — shorts leaving, borrow costs elevated but stabilising, and options traders unworried — on a fund that itself is flat to slightly negative over the past month at $51.70.
The key variable to track from here is whether the cost to borrow continues to normalise as availability remains elevated, or whether the lending pool tightens again and the availability dip seen last Friday proves to be the start of a new pattern rather than a one-day anomaly.
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