FTA's Short Interest Holds as Borrow Market Stabilises

FTA, the First Trust Large Cap Value AlphaDEX Fund, ends the week with its borrowing market in a more settled state than the frenetic pace of recent weeks suggested was coming.

The short interest story has not changed materially since the earlier note published today. The absolute level remains tiny at 0.27% of the free float, around 37,000 shares, and the month-on-month rate of change that drove the headline (up roughly 446%) has now started to flatten. Day-on-day, short interest actually fell a fraction, down 0.25%. The week-on-week figure is still elevated at 45%, but the underlying share count has been oscillating rather than marching higher, touching nearly 48,200 shares on October 21 before pulling back to current levels. For a passive ETF, this kind of churn more likely reflects arbitrage and hedging mechanics than any directional conviction against the portfolio.

The borrow market has also stabilised. Availability now reads at 485%, meaning roughly five shares remain available for every one already lent out. That is a marked improvement from the 52-week trough of around 9% availability and the brief episode in late September when every share in the lending pool was out on loan. Cost to borrow has crept up slightly on the week to 6.36%, though it remains well within the range it has traded across October, between roughly 5.3% and 7.7%. There is no meaningful squeeze pressure here, and the lending pool is comfortable at current short interest levels.

The fund itself has had a quiet week. FTA closed at $101.87 on October 27, up 0.7% on the week and 5.1% over the past month. Dividend history shows quarterly distributions continuing, with the most recent payment of $0.53 per share in September. The ORTEX short score sits at 48.6, near the middle of the range, consistent with a fund that draws no strong directional opinion from the market. Options activity is absent, with the put/call ratio reading zero across the entire 30-day history, as would be expected for a niche ETF of this size.

What to watch next is whether the short interest stabilises at current levels or resumes its earlier upward drift, which would renew questions about what specific hedging or arbitrage strategy is driving borrow demand in what is otherwise a low-profile large-cap value vehicle.