TRFK lending market eases a day after full tightness

The extreme borrow squeeze that hit the TRFK lending pool on 6 October has partially unwound, leaving a mixed picture one session later.

Yesterday's note captured the moment availability collapsed to zero, with every share in the pool lent out and cost to borrow spiking to 6.72%. Wednesday's data shows a partial reversal on both counts. Availability has recovered to 127%, meaning there are now roughly 1.3 shares available for every one already borrowed, compared to nothing at all 24 hours prior. Cost to borrow has pulled back to 3.79%, down from the 6.72% peak, though still above the 2.13% low seen on 1 October. The borrow market remains active rather than settled, with availability swinging between 0% and 191% across the past five sessions alone.

Short shares tell a similarly volatile story. Estimated shorts rose 140% on 7 October to around 52,600, after falling to just 6,800 on 5 October and rebounding to 21,900 on 6 October. The daily swings are large relative to the absolute level. The 30-day trend is still sharply lower: short shares peaked above 270,000 in early September and have not come close to that since. The ORTEX short score has been largely flat this week, ranging between 44 and 49, consistent with a moderate rather than extreme positioning read.

Options positioning has shifted more meaningfully. The put/call ratio reached 1.0 on 7 October, its highest reading since late August, and now sits more than 1.2 standard deviations above its 20-day average of 0.71. That follows a prolonged period where puts were heavily underweighted: the ratio was below 0.25 as recently as late August. The direction of travel in options over the past three weeks has been a steady drift toward more protective positioning, even as the fund itself gained 2.5% over the past week and nearly 8% over the past month.

The ETF closed at $103.41 on 7 October, off 0.5% on the day but up solidly on the week and month as the AI and digital infrastructure theme has continued to find buyers. The ORTEX short score of 46.3 sits in roughly neutral territory, and with availability now back above 100%, the acute squeeze conditions of 6 October have not persisted. Whether the borrow market stabilises here or revisits tightness will be the key signal to watch in the sessions ahead.