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Call buyers are piling into SOXS, the Direxion Daily Semiconductor Bear 3X ETF, even as short sellers unwind. The borrow market has lurched between feast and famine across a single week, producing one of the more unusual lending patterns seen on this ETF this year.
Short interest fell 24% in one week to 3.04% of float by October 14, down from a peak of 11.3 million shares shorted on October 6. In raw terms, short shares dropped from roughly 11.25 million to 8.52 million over eight trading days.
The speed of that exit is notable for a leveraged inverse ETF. SOXS is itself a short-semiconductor instrument, so a holder of this fund is already positioned for chip stocks to fall. Someone shorting SOXS is, in effect, betting the other way: that semiconductors will rally and the ETF will decay. That trade was crowded at the start of October. It is being unwound now.
The borrow market tells the same story in a more erratic way. Availability collapsed to 44.8% on October 12, meaning less than one share was available for every two already borrowed. That is a tight market by any measure, and the 52-week low hit 1.1% earlier in the year, showing just how extreme borrow squeezes can get in this name.
Then, on October 13, availability blew out to 288%, as short covering returned shares to the lending pool. By October 14 it had tightened again to 85%. The swings suggest a mechanically small and lumpy lending market, where a few large positions dominate supply.
Cost to borrow stands at 4.47% as of October 14, up 10.4% on the week. That is not high in absolute terms, but the direction is consistent with some residual demand for borrows even as positions are trimmed.
The put/call ratio on October 9 dropped to 0.458, 2.2 standard deviations below its 20-day mean of 0.606. By October 14 it had recovered slightly to 0.549, still below the mean of 0.584. Across the past six weeks, the PCR has trended from a range of 0.68 to 0.77 in September down toward current levels.
For context, a low PCR on SOXS means traders are buying calls on a bear-market ETF. A call on SOXS profits if the semiconductor sector falls further. The shift toward calls, alongside the short-covering, points to traders repositioning via options rather than the stock lending market.
SOXS gained 13.6% on October 14 and 38.7% over the past week, reflecting a sharp move lower in semiconductor stocks. The ORTEX short score sits at 65.7, broadly stable across the past two weeks. The key variable is whether availability continues to swing or settles as the remaining short base stabilises around the current 3% of float level.
See the live data behind this article on ORTEX.
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