Despite a year-long rally and recent surge, SK Hynix’s options debut on Tuesday saw less speculative activity than anticipated. While thousands of contracts traded, the new options were largely overshadowed by the robust performance and existing trading volumes of other semiconductor stocks and popular leveraged single-stock ETFs, with initial trading dominated by bearish call-selling.
Options for the South Korean chip giant SK Hynix (SKHY) began trading on Tuesday, attracting less fanfare than many might have expected given the stock's impressive year-long rally and a more than 20% surge on the day of its debut alone.
By midday Tuesday, approximately 150,000 SK Hynix options contracts had changed hands. While call options outnumbered puts, a notable trend observed in the initial trading was a preference for selling calls, indicating a bearish or cautious sentiment among some traders, according to data from Cboe LiveVol. Cboe introduced five different expiry cycles for the options: monthly contracts for July, August, September, December, and a longer-term option for March 2027.
Chey Tae-won, chairman of SK Group, during the company's initial public offering (IPO) at the Nasdaq MarketSite in New York, US. Michael Nagle | Bloomberg | Getty Images
While SK Hynix's options volume surpassed that of the VanEck Semiconductor fund (SMH), which saw 110,000 contracts traded, and nearly doubled the volume in individual stocks like Sandisk (SNDK) or Marvell (MRVL), it still lagged significantly behind other major players in the sector. For instance, the Roundhill Memory ETF (DRAM), now boasting $23 billion in assets, and Micron (MU) both recorded around 380,000 contracts traded on Tuesday. Nvidia (NVDA), a semiconductor behemoth, dwarfed them all with approximately 2.3 million contracts traded.
One primary reason for the subdued interest in direct call-buying for SK Hynix could be the emergence of single-stock ETFs and leveraged funds specifically tied to the South Korean chip sensation. These alternative investment vehicles have likely siphoned off a considerable portion of speculative capital leading up to SK Hynix's U.S. listing and the subsequent launch of its options. "Those ETFs – double long, double short – that's a lot of demand that maybe got taken away but I'm sure we'll see a pickup in volume when they list the weeklies," commented Scott Bauer, CEO of Chicago-based Prosper Trading Academy.
The largest trades observed during the session highlighted this cautious sentiment. The two most significant trades appeared to originate from a single trader who sold over 2,200 July 17th expiring 180-strike calls, near at-the-money contracts, bringing in roughly $9 per piece for a total sale value of approximately $2 million. In fact, LiveVol data indicated that all of the top seven single trades by volume were bearish positions.
This market dynamic underscores how a crowded field of investment products, even for a high-performing stock, can fragment speculative interest, causing a new option listing to debut with less fireworks than its underlying stock's performance might suggest.
