Three distinct bearish signals converged on KRE — the SPDR S&P Regional Banking ETF — within 24 hours. Short interest, options positioning, and borrow availability are all flashing red simultaneously.
Short interest in KRE hit 125% of float as of May 18 — a record high by ORTEX estimates. That figure jumped 14.5% in a single week. To put it plainly: more shares are shorted than currently exist in the free float, a situation only possible in ETFs where creation/redemption mechanics allow shares to be manufactured.
The borrow market reflects the demand. Availability has collapsed to just 27% — meaning for every four shares currently lent out, only one remains available to borrow. A week ago, availability stood near 180%. That 85% week-on-week drop is a dramatic tightening in the lending pool.
Cost to borrow has risen 29% over the past week to 1.58% annualised. That's still a relatively low absolute rate, but the direction and pace matter — it confirms new short positions are being added at an accelerating clip.
Put-call ratio hit 2.27 on May 19. That's 2.5 standard deviations above the 20-day mean of 2.09. The 52-week high for KRE's PCR stands at 2.46, so the current reading is approaching the most bearish options positioning seen all year.
The PCR has been structurally elevated for weeks — KRE's 20-day mean of 2.09 itself signals persistent hedging demand. The latest spike pushes that positioning into extreme territory. Put buyers are paying up for downside protection.
KRE's ORTEX short score sits at 71.7 out of 100. It was 66.5 just nine days ago. The jump reflects the confluence of rising short interest, tightening availability, and elevated cost to borrow all moving together.
The ETF tracks around 140 US regional banks. The sector has faced overlapping headwinds — rate sensitivity, deposit competition, and ongoing concern about commercial real estate exposure. Bears are pressing those themes through the ETF rather than single-name positions, which explains the structural nature of the short build.
Watch: Availability is already in tight territory. If it breaches the 52-week low of 1.7%, the borrow pool is effectively exhausted — which would cap any further short additions and could force covering pressure regardless of the macro backdrop.
See the live data behind this article on ORTEX.
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