DTCR Shorts Build as the ETF Slides 5%

The dynamic in DTCR has shifted since last week's note: what was a rising fund with quietly tightening borrow costs is now a falling fund with shorts accelerating their build, and the two stories are no longer decoupled.

Short interest has moved decisively in one direction this week. Positions climbed 41% over the past seven days to reach 3.4% of free float, the highest level in the 30-day window and a meaningful step up from the 2.4% reported in the previous note. The daily readings show the build was continuous, not a one-day event: shares short rose from around 718,000 on September 21 to just over 1 million by September 29. Days to cover per the most recent FINRA data is 1.4, so this remains a low-conviction short in terms of covering pressure, but the pace of accumulation is harder to dismiss as noise than it was a week ago.

Borrow conditions have eased somewhat even as the short book has grown, and that contrast is worth noting. Cost to borrow peaked at 1.39% on September 22, precisely as the previous note flagged, and has since retreated to 1.09%. Availability has tightened from around 375% to 216%, meaning roughly two shares are now available for every one currently lent out, compared to nearly four last week. The 52-week trough is 41%, so there is still significant headroom before the lending market comes under real pressure. The borrow cost pullback alongside continued short building suggests that fresh supply of lendable shares has kept pace with demand so far.

Options positioning is modestly more defensive than the recent norm, though not dramatically so. The put/call ratio came in at 0.24, running about 1.6 standard deviations above its 20-day average of 0.22. That is elevated relative to the range of the past month but well below the 52-week high of 0.39. Call volumes still heavily dominate the options market for this ETF, which is consistent with the fund's identity as a thematic AI-infrastructure vehicle that attracts buyers more than hedgers. The slight defensive tilt at the margin aligns with the price action rather than anticipating anything further.

The price decline is the clearest change in the week's data. DTCR fell 5.1% over the past seven days to close at $27.31, reversing a meaningful portion of the 6.1% gain reported in last week's note. The one-month decline is now 2.5%. The ORTEX short score is 43.6, up from 37.6 a week ago, consistent with the rising short interest and falling price. That is still a mid-range reading rather than an extreme, but the direction of travel over the past fortnight has been consistently higher.

What to watch next is whether availability continues to tighten as the short book grows. If positions keep building at anything close to this week's pace while lendable supply stays flat, the availability ratio will compress further toward the lower end of its recent range, and borrow costs may retest the highs seen around September 22.