EWY, the iShares MSCI South Korea ETF, heads into October with a notable shift in its short positioning: bears who piled in hard through late August have spent the past month covering at pace, even as options traders have grown more defensive over the same stretch.
Short interest has fallen sharply from its recent peak. At nearly 20% of the free float, the level remains elevated by most measures, but the direction of travel is unmistakably lower. Shorts dropped 26% over the past month, with the bulk of that covering concentrated in the seven days through September 29, when positions fell another 12.5%. The absolute level still points to a meaningful contingent of investors positioning for weakness in Korean equities, but the momentum has turned against them. FINRA's most recent fortnightly settlement data, through September 15, showed roughly 13.8 million shares short, corroborating the trend.
The borrow market tells a similar story. Availability has loosened substantially, with roughly five shares available for every two currently borrowed. That is a marked change from the tightest point of the past year, when availability reached near-zero and the entire lending pool was effectively exhausted. Cost to borrow has stayed low throughout, running at just 0.45%, down roughly 10% over the week, which suggests there is no squeeze pressure building in the lending market. Shorts can still enter or exit relatively cheaply.
Options positioning cuts the other way. Demand for downside protection has been rising. The put/call ratio at 1.12 is well above its 20-day average of 0.96, a divergence of roughly 1.6 standard deviations. The PCR has climbed almost every week since early September, when it was running in the 0.84 to 0.88 range. That steady drift higher, even as short positions are being cut, suggests the caution is not disappearing but migrating from the outright short market into options hedges.
The ORTEX short score has eased alongside the covering, dropping from around 54 in mid-to-late September to 49.7 by the close of the 29th, a meaningful move back toward the midpoint of the 0 to 100 range. That score reflects the combination of falling short interest and the looser availability conditions, and its retreat implies the data no longer flags EWY as a particularly high-conviction short setup.
On the price side, EWY gained 1.9% on Tuesday to close at $187.10, recovering some of a 2.9% weekly loss. The monthly picture is modestly positive, up 3.8%. The most striking move in the earnings history attached to the fund came in May 2026, when EWY jumped 11.2% on a single day, followed by an additional 9.1% over the following week. That was the outlier. The prior two events in late 2024 and late 2025 produced moves of less than 1% on the day, though the five-day window after November 2024 showed an 8.6% decline.
Institutional holders are a mix that reflects the ETF's role as a macro instrument rather than a fundamental pick. Bank of America held roughly 10% of shares as of June, having added 2.4 million shares in the period. Morgan Stanley and several large broker-dealers also added meaningfully. Appaloosa Management, David Tepper's firm, held just over 2% as of June and barely changed its stake, a hold rather than a conviction add. The Tennessee Department of Treasury trimmed 940,000 shares, a notable reduction among public pension holders.
The key dynamic to watch is whether short covering continues to accelerate through the start of Q4 while options hedging stays elevated, and whether the divergence between those two signals narrows or widens as Korea-specific macro news, including currency moves and semiconductor cycle data, continues to drive the fund's day-to-day price action.
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