The options market just flashed one of its most bullish readings of the year. Yet short sellers are still rebuilding positions at the fastest pace in months. That tension is the QQQ story right now.
The Nasdaq-100 ETF closed Monday at $742.74, up 10.2% in May. Still, bears have not retreated. Short interest sits at 65.9 million shares — 10.3% of the float. That is the highest level since early May, rebuilt almost entirely in the past two weeks.
The put/call ratio dropped to 1.538 on Monday. That is 2.1 standard deviations below its 20-day mean of 1.595. For context, QQQ's PCR has been structurally elevated for months — its 52-week high is 1.855. Monday's reading is near the bottom of that range, not far above the 52-week low of 1.086.
Options traders are pulling back on downside protection. They are not panicking out of puts. They are simply buying fewer of them. The ETF's 10% monthly gain appears to be convincing hedgers, if not outright bears.
Short sellers are moving in the opposite direction. From May 22 to May 29, short interest jumped 15.8%. That follows an 18% single-day spike on May 28. The position is now within striking distance of the early-May peak of 68.9 million shares.
This is a deliberate rebuild. In mid-May, shorts covered aggressively — shedding more than 10 million shares in under two weeks. They have now added almost all of it back, even as QQQ posted its strongest month in years.
Cost to borrow has ticked up 8.4% on the week to 0.42%. It remains low in absolute terms. The borrow market is not stressed. Availability stands at 320% — for every share currently lent out, more than three remain available. New shorts are finding supply without difficulty.
Two signals. Two opposite readings. Hedgers in the options market are standing down. Short sellers in the lending market are doubling down.
One way to read it: options traders are responding to the price action; short sellers are responding to valuation. The Nasdaq-100 has recovered almost the entirety of its tariff-driven drawdown in eight weeks. At current levels, the bears may view the risk/reward as skewed.
The ORTEX short score sits at 55.3 — down from 61.4 on May 27. That pullback reflects the loosening borrow market more than any reduction in short conviction. The underlying position itself has barely moved.
The divergence between options sentiment and short positioning rarely holds for long. Watch whether the PCR mean-reverts back toward 1.60 — that would signal renewed hedging demand. Watch also whether short interest clears the early-May peak of 68.9 million shares. A breach there would signal that bears have fully reset and are adding net new conviction, not just recovering covered ground.
Data summary
See the live data behind this article on ORTEX.
Open QQQ 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.
