PGJ, the Invesco Golden Dragon China ETF, is sending mixed signals. Short sellers are cutting exposure while options traders load up on puts at the highest rate in a year.
The standout data point today is the options market. PGJ's put-call ratio jumped to 1.49 — a z-score of 2.81 standard deviations above its 20-day mean of 0.73. That is the most bearish options positioning in 52 weeks.
The move is sharp. Just two weeks ago the PCR sat near 0.55. It has nearly tripled since late April.
The options signal contrasts sharply with short-side activity in the lending market. Short interest in PGJ fell 14.4% over the past week to 1.33% of float. That is a modest absolute level.
Cost to borrow has collapsed in parallel. It dropped 54.9% over the week to just 1.0% APR — the cheapest it has been in months. In March, borrow cost reached 6.4%. The lending market has loosened dramatically since then.
Availability in the lending pool is wide. With borrow this cheap and short interest this low, there is no stress in the lending market.
The picture is clear: traders who want bearish exposure to Chinese internet names are increasingly using puts rather than outright short positions.
The gap between options sentiment and short positioning is unusual. Options traders — often expressing macro or hedging views — are paying up for downside protection. Meanwhile, short sellers who borrow and sell shares are reducing conviction.
One plausible read: institutional holders are buying puts as portfolio hedges against China risk without incurring the cost and complexity of shorting directly. The ETF is up 6.1% over the past month, which gives hedgers a reason to protect gains.
The ORTEX short score sits at 41.3. It has been range-bound between 39.9 and 41.9 for the past two weeks — no directional signal from the composite metric.
What to watch: Whether the PCR holds above 1.0 as existing option positions roll. A retreat toward the 0.7 mean would suggest the hedging wave is receding. A further rise toward the 52-week high of 1.72 would indicate the protective demand is intensifying.
See the live data behind this article on ORTEX.
Open PGJ on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
