SPY: Election Week Passes, Options Stay Defensive as Shorts Continue to Unwind

The story heading into this week was about whether a loaded event calendar, midterms, Apple, AMD, and payrolls, would crystallise the bearish positioning that had built through October. With those catalysts now largely through, the data shows bears continuing to retreat but options traders still more cautious than their recent baseline.

Short interest has extended its decline. Borrowed shares fell to 93.6 million as of November 3, down a further half a percent on the week, and now sit 7% below the October 23 peak of 100.5 million. At 9.1% of the free float, the position is back to levels last seen in mid-September before the two-month accumulation run began. The ORTEX short score has drifted in the same direction, edging down to 47.3 from 48.8 at the end of October. Neither figure screams capitulation, but the direction of travel is consistent: the bearish conviction that pushed borrowed shares above 100 million for much of October has not found fresh fuel.

The borrow market has loosened meaningfully from last week's tighter conditions. Availability has climbed to 844%, well above the mid-October range of 590 to 710%, indicating ample supply of shares to borrow relative to the current short position. The 52-week trough in availability was 34%, so the lending pool is nowhere near stressed. Cost to borrow remains trivial at 0.29%, essentially unchanged on the week and down sharply from a month ago. The structure here does not support a squeeze narrative; bears who want to maintain or add to positions face no material friction.

Options are the more interesting signal right now. The put/call ratio has jumped to 2.08, more than two standard deviations above its 20-day mean of 1.90, and is approaching the 52-week high of 2.33. That is a notably defensive posture. For much of October the PCR was running in the 1.80 to 1.84 range; the step-up to above 2.08 this week, sustained over both Monday and Tuesday's readings, suggests hedging demand picked up rather than eased as the event calendar cleared. Whether that reflects residual uncertainty around the election result or fresh concern about the macro backdrop, the options market is expressing more caution than the short book alone would imply.

SPY closed at $754.35 on November 3, down 1.99% on the week and roughly 1.99% over the past month. The price action has been soft but not disorderly. Institutional ownership tells a familiar story for an ETF of this size: JPMorgan held 47.2 million shares as of June 30, with Jane Street adding 24 million shares in that period to reach 44.3 million, the most notable flow among the top holders. Goldman Sachs and Wells Fargo reported no change as of September 30. These are mostly dealer and market-maker holdings rather than directional views, and their scale reflects the ETF's $796 billion market cap rather than any particular positioning thesis.

The near-term question is whether the options defensiveness fades now that the event calendar has thinned, or whether the PCR's proximity to its 52-week high reflects a more durable shift in how the market is hedging broad equity exposure.