Two conflicting signals have emerged on SMFG this week. Short sellers are retreating. Yet the cost to borrow those same shares has quadrupled overnight, and the options market just hit its most bearish reading in a year.
The headline number is stark. Cost to borrow jumped to 6.70% on September 30, up from 1.22% the day before. That is a 310% rise in a single week, and a 338% rise over the past month.
For most of September, CTB sat in a tight band between 1.1% and 1.7%. The spike to 6.70% is an outlier by any measure. A previous dividend-related article noted CTB at just 1.43% with the lending market showing "no sign of stress." That has changed materially since September 30.
Availability has swung dramatically. In mid-September, availability fell as low as 1.6%, the 52-week trough, meaning almost every share in the lending pool was already lent out. Since then the pool has expanded sharply. Availability now stands at 140%, meaning roughly 1.4 shares are available for every one currently borrowed. That is a far looser pool than the squeeze conditions seen two weeks ago.
The paradox is worth noting: availability is rising at the same time the cost to borrow is spiking. This can happen when lenders reprice existing inventory aggressively, even as new supply enters the market.
The put-call ratio hit 1.90 on September 28, the highest reading in 52 weeks. It has since retreated to 0.31, close to its 20-day mean of 0.32. The spike was a single-session event, not a sustained shift in positioning.
Even so, the 52-week low PCR is 0.012, and the prior range through August and most of September sat between 0.14 and 0.27. The September 28 reading stands well outside that range. Whether it reflects genuine hedging demand or a one-day flow distortion, it coincided with the early signs of CTB stress.
Short positions have dropped 15.2% over the past week to approximately 7.2 million shares, down from 8.5 million on September 23. The ORTEX short score sits at 51.8, roughly neutral. Days to cover from the most recent FINRA filing stands at 4.82.
Short interest as a percentage of free float is not material here. The positioning story is about the direction of the borrow market, not the size of existing shorts.
The CTB spike to 6.70% while availability is relatively loose is the unusual combination. Watch whether CTB remains elevated into next week, or reverts toward the 1.1% to 1.7% range that held through most of September. SMFG next reports earnings on November 13.
Data summary
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