REMX, the VanEck Rare Earth and Strategic Metals ETF, heads into the week with an unusual split: short sellers are unwinding at speed, yet options traders are more defensively positioned than at any point in the past year.
The price tells the first part of the story. REMX closed at $92.13 on Tuesday, down nearly 15% on the week and off 9% over the past month. That's a sharp drawdown for a fund tracking critical minerals — the kind of move that typically triggers either a fresh wave of shorts piling in or a rapid covering rally. This week, it's been the latter.
Short interest has collapsed over the past ten days. Estimated short positions peaked around 1.39 million shares on May 12 and have since more than halved, falling to roughly 697,000 shares — 3.4% of the float — by May 19. That's a 46% drop over the week alone, and the ORTEX short score has declined in parallel, easing from 54.5 on May 12 to 48.8 today, retreating firmly into neutral territory. The borrow market reflects the same shift: availability has swung from extremely tight to comfortable. Just eight trading days ago, availability had collapsed to around 16%—only one share available for every six already borrowed — one of the tightest readings of the past year. Now it has loosened to 152%, with over 1.7 million shares available for lending. Cost to borrow remains modest at 1.49%, well below the 2.26% peak seen on May 12, though it is about 55% higher than a month ago — a sign that some residual demand to short persists even as the largest positions have been returned.
Options positioning tells a contrasting story. Defensive demand is at its most elevated in at least a year. The put/call ratio hit 0.63 on May 19 — the highest reading in the ETF's 52-week options history, which ran as low as 0.15 last year. At 2.25 standard deviations above its 20-day mean of 0.51, that's the kind of hedging signal usually associated with a fund under genuine macro stress. The divergence is notable: shorts are being closed out while protective put buyers are actively adding cover. That's not a consensus bearish bet. It reads more like two different investor types — short-term traders covering, longer-duration holders hedging.
The macro backdrop makes the hedging instinct understandable. Rare earth and strategic metals remain at the centre of US-China trade tensions. Tariff policy disruptions and export control uncertainty around Chinese-controlled supply chains for neodymium, dysprosium, and other critical minerals have been running hot through May. A fund with REMX's composition — spanning producers from China, Australia, and smaller emerging-market miners — is acutely exposed to any deterioration in those bilateral dynamics. The sharp price decline over the past month reflects that vulnerability directly.
The key dynamic to watch is whether options defensiveness persists as short positions continue to normalise, or whether the put-heavy skew ultimately attracts fresh short sellers back into the trade if the macro backdrop darkens further.
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