SMH Put Open Interest Hits 1.7 Million Record as Chip Rally Drives Hedging
Updated
Updated · CNBC · May 28
SMH Put Open Interest Hits 1.7 Million Record as Chip Rally Drives Hedging
3 articles · Updated · CNBC · May 28
Nearly 1.7 million SMH put contracts were outstanding after a two-month surge, the highest on Bloomberg data back to the ETF’s 2011 launch and far above roughly 500,000 calls.
Implied volatility in the VanEck Semiconductor ETF climbed toward 55% Tuesday—near a one-year high—signaling traders are largely buying puts to hedge the semiconductor rally rather than simply chasing it.
Single-stock options have become even pricier, making the sector ETF a cheaper way to position for a pullback; Micron’s implied volatility was about 105%, versus 55% for SMH and 16% for the S&P 500.
That hedging-heavy flow may point to a more durable advance, one strategist said, even as some traders still use SMH put spreads to bet the chip squeeze is nearing an end.
As AI fuels a chip boom, why are traders placing record bets on a semiconductor downturn?
Is the record hedging in chip stocks a sign of a healthy market or a coming collapse?