Rally in chip stocks becomes the most hated in history. Here’s the data
Micron Memory Japan KK booth at the Semicon Japan exhibition in Tokyo on December 18, 2025.
Kiyoshi Ota | Bloomberg | Getty Images
The rally in semiconductor stocks is so incredible that traders can’t help but bet against it.
Open interest in sales contracts VanEck Semiconductor ETF (SMH) It has risen to just under 1.7 million in the past two months, the highest level ever, according to Bloomberg data dating back to the fund’s launch in 2011. By comparison, there are just over 500,000 call contracts outstanding.
At the same time, implied volatility in SMH is rising, approaching 55% on Tuesday, the highest level in more than a year. That’s a sign that the puts are mostly bought, according to Zed Francis, chief investment officer at Chicago-based Convexitas.
“People are trying to hedge rather than lean into this move,” said Francis, who runs semiconductor options trading strategy on behalf of clients. “We’ve had this leaping movement in space, but it results in hedging activity rather than a chase. So it may be more sustainable than a boom and bust.”
Clearly bearish speculation may not tell the full story about the surge in sector ETF puts: The appeal of SMH puts may also be linked to how manic and expensive options trading on single stocks has become.
Just as implied volatility in the chip sector is higher compared to the broader S&P 500’s 16% volume, implied volatility in individual stocks is also higher. This means that there may be situations where investors find it advantageous to use a sector ETF rather than trading individual stocks: MicronThe implied volatility here is 105%.
“What kind of strategies can you use if you start trading 100 to 120 percent with skewed volume?” TheoTrade co-founder Don Kaufman said in a phone call after the bell. he said. “Implied volatility was just exciting on Micron, so I took the other side on SMH.”
Kaufman purchased the 535/525 strike spread on SMH, which expires at the end of August.
“I’m taking a shot well out of the money on this, a 30-delta spread looking for the ultimate pullback,” he said. “The boredom must end soon. Who in their right mind would want to spend that much money on jaw-dropping nonsense?”
