OIH heads into the final stretch of May with one of the more charged short setups in the ETF universe — a put/call ratio at its highest relative reading in months, short interest holding above a fifth of the float, and an oil price backdrop that is actively working against the trade.
The most striking signal this week is in options. Demand for downside protection has jumped sharply — the put/call ratio reached 1.07 on May 26, more than 2.5 standard deviations above its 20-day average of 0.99. That is the most defensive options positioning the ETF has seen in recent memory, with only the 52-week high of 3.47 (hit during a period of acute oil-price stress) marking a more extreme reading. The shift in options skew has come in just the past five sessions. As recently as mid-May the PCR was running in line with its mean; the acceleration higher happened this week, coinciding with headlines about plunging oil prices lifting the leisure sector at energy's expense.
Short interest tells the same bearish story, and has held remarkably stable at elevated levels. Short interest runs at roughly 20.7% of the float — a large number for any ETF. Over the past month it climbed about 4.5%, ticking up from the ~18-19% range to where it now sits. The week-on-week reading eased just 0.7%, suggesting short sellers who built positions through April and early May are in no rush to cover. Cost to borrow has drifted higher alongside — it closed at 2.52% on May 26, up 5.6% on the week and 40% above where it was a month ago. That is not extreme in absolute terms, but the direction matters: borrowing OIH is measurably more expensive than it was four weeks ago.
Availability tells a more nuanced story. After a period of very tight borrow — availability briefly dropped to near 22% in mid-May — it has loosened back to about 37% heading into week-end. That remains firmly in "tight" territory: for every 100 shares already borrowed, only 37 are still available to lend. The 52-week low availability was 1.5%, so current conditions are not at crisis levels, but they are far from comfortable for new shorts entering the trade. The ORTEX short score of 67.5 reflects the combination: elevated short interest, moderately tight availability, and rising cost to borrow.
The macro backdrop is the clearest risk to the short thesis. News flow this week featured oil prices sliding — with headlines explicitly linking plunging crude to a rally in leisure and consumer names. That is the environment short sellers in OIH want. However, the ETF has actually gained 1.4% over the past month even with that headwind, and the week's loss is a modest 1.7%. Shorts have not yet been punished for their positioning, but the gap between the options caution being expressed and the relatively contained price move is a tension worth tracking. The ORTEX short score has nudged steadily higher over the past two weeks — from 66.9 on May 13 to 67.5 now — reflecting a slow but consistent ratchet upward in the bearish setup.
The next meaningful test for this positioning is crude oil's next directional move. If energy prices remain under pressure, the high short interest will look prescient; if they stabilise or bounce on OPEC signals or demand data, two decades of history suggest oil services names are among the fastest to reprice higher — and with 20% of the float short, any reversal would face a meaningful wall of potential covering.
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