SPY has added 1.2% over the past week and 5.4% in a month, reaching $759.57 — but the more telling development is happening beneath the surface, where short sellers have been stepping back and options traders are abandoning the defensive posture that defined the prior two months.
The short interest story is one of gradual de-risking. Short interest has dropped 8% over the past week and nearly 10% over the past month, falling to 10.6% of free float — down from a cluster around 12% in late April and early May. In raw share terms, roughly 11 million fewer shares are now borrowed than were held short six weeks ago. That reversal lines up with the price grind: as the recovery from the tariff-driven April lows has held, the short thesis has weakened and positions have been pared back accordingly. The ORTEX short score now sits at 46.4, stable through the week and well off the elevated readings from mid-May — confirming the directional shift is not fresh news but a sustained trend. Borrowing costs reflect the same relaxed environment, running at just 0.28% annualised, the lowest level in two months, and down 35% on the week. Availability is extraordinarily loose at 1,583% — meaning for every share currently borrowed, more than fifteen remain available — which places any squeeze scenario firmly off the table.
Options positioning confirms the shift, but the story has evolved meaningfully since last week's report. The put/call ratio has continued its slide, closing at 1.81 on Tuesday — the lowest print in the 30-day window — and sitting 1.6 standard deviations below its 20-day mean of 1.93. That negative z-score is the mirror image of the +2.3 standard deviation spike that headlined the May 27 note, when the ratio briefly touched 2.21. The unwind is now clearly more than a single-day move. Put buyers were the last segment of the market expressing genuine conviction that this rally would fail; the 52-week low on the ratio is 1.27, so the normalization still has room to run. What has changed in the past week is that the z-score has flipped decisively negative — options traders are no longer just failing to add hedges, they are actively letting them roll off.
The institutional picture adds useful texture. As of the end of March, the five largest holders on record were JPMorgan, Morgan Stanley, Goldman Sachs, Bank of America, and Jane Street — collectively holding just over 15% of shares. Morgan Stanley and Jane Street both added meaningfully in the quarter, with Morgan Stanley increasing its position by 11.1 million shares and Jane Street by 10.3 million. Wells Fargo, by contrast, cut 11.6 million shares — the largest single reduction in the top-holder list. These are largely broker-dealer and market-making positions rather than directional calls, but the pattern of big-bank additions into the Q1 volatility episode is consistent with the broader story of institutional accumulation during the April drawdown.
Taken together, the positioning landscape for SPY has shifted from the cautious, hedge-heavy setup of May toward something that looks more like normalisation. Shorts are down sharply from their peak, borrowing conditions are the loosest they have been in months, and the options put overhang that provided the clearest signal of latent bearishness is now unwinding at pace. The question worth tracking from here is whether the put/call ratio continues toward its 52-week floor at 1.27 — which would signal genuine complacency rather than mere relief — or whether it stabilises in its current range as investors reassess the macro backdrop into the second half.
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