Short Interest Retreats
Short Interest in Key ETFs Plunges 82-93% in May, Indicating Reduced Bearish Sentiment
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Key Points
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YieldMax DKNG Option Income Strategy ETF (DRAY) reported short interest of 2,936 shares as of May 29, down from 22,592 on May 14 (an 87.0% decline). Its short-interest ratio was 0.3 days, and about 2.0% of shares were reportedly short sold.
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Twin Oak Short Horizon Absolute Return ETF (TOAK) is described as using a mix of long puts, long calls, and debit spread options with less than 1 year to expiration as part of its multi-strategy options approach. Short interest fell to 235 shares as of May 29 (from 1,462 on May 14), with a short-interest ratio of 0.0 days.
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Coastal Compass 100 ETF (ROPE) was described as selecting 25–50 large-cap stocks and using a trend-following approach, while aiming for downside protection “using cash.” Its short interest dropped to 213 shares as of May 29 (from 1,205 on May 14), with a short-interest ratio of 0.1 days.
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For First Trust Intermediate Duration Investment Grade Corporate ETF (FIIG), the article named specific institutional buyers: Aptus Capital Advisors LLC (new position in Q4 ~ $32,000), Advisory Services Network LLC (new position in Q3 ~ $61,000), Roxbury Financial LLC (new position in Q1 ~ $62,000), Allworth Financial LP (new position in Q3 ~ $64,000). It also reported that Private Trust Co. NA increased its stake by 406.3% in Q4 to 4,025 shares (after adding 3,230 shares), valued around $85,000.
Bearish bets against several niche income ETFs collapsed in May 2026, with short interest falling between 82% and 87% in just two weeks. The steepest drop hit the YieldMax DKNG Option Income Strategy ETF (DRAY), where shares sold short plunged from 22,592 on May 14 to just 2,936 by May 29 — an 87% decline, according to MarketBeat.
The trend swept across options-based, dividend-focused, and corporate bond ETFs alike. Short-interest ratios across the affected funds fell to near zero, signaling that traders are no longer using these funds as hedging tools against a market downturn.
Short Interest Falls to Near Zero Across Five ETFs
Four funds reported dramatic short-interest declines by the May 29 settlement date. The Twin Oak Short Horizon Absolute Return ETF (TOAK) fell from 1,462 shorted shares to just 235 — an 83.9% drop — with a short-interest ratio of 0.0 days, according to Watchlist News. The Coastal Compass 100 ETF (ROPE) dropped from 1,205 to 213 shorted shares, an 82.3% decline, with a 0.1-day ratio.
The First Trust Intermediate Duration Investment Grade Corporate ETF (FIIG) also saw an 80.8% reduction in short interest compared to April levels, settling at a 0.1-day ratio. Strategy Shares Nasdaq 7HANDL Index ETF (HNDL) posted similarly steep declines. All five funds ended May with short-interest ratios well below half a day to cover.
What These Funds Do — and Why Shorts Are Leaving
Each fund uses a different strategy. DRAY writes synthetic covered calls on DraftKings (DKNG) stock to harvest option premiums. TOAK uses a mix of long puts, long calls, and debit spreads — all with under one year to expiration — to target low-volatility returns. ROPE picks 25 to 50 large-cap stocks using a trend-following approach and holds cash for downside protection.
When markets settle and volatility drops, the case for shorting these funds weakens. For HNDL — a fund-of-funds targeting a steady 7% annual distribution — shorting is also expensive. Short sellers must pay out dividends to share lenders. On June 4, HNDL declared a monthly dividend of $0.1336 per share, equal to roughly a 7.1% annualized yield, according to Strategy Shares.
Institutional Buyers Step Into the Corporate Bond ETF
As short sellers exited, institutional buyers moved into FIIG. Private Trust Co. NA grew its stake by 406.3% in Q4, adding 3,230 shares to reach 4,025 total — a position worth roughly $85,000, according to Fintel. Several advisory firms also opened new positions: Allworth Financial LP added $64,000, Roxbury Financial LLC added $62,000, Advisory Services Network LLC added $61,000, and Aptus Capital Advisors LLC entered with $32,000.
The wave of small but broad institutional buying points to growing confidence in intermediate-duration corporate bonds. If this trend continues, FIIG could see further growth in assets under management as investors seek stable income in a steadier rate environment.
Small Share Counts Mean Big Swings — With Caveats
Some analysts warn against reading too much into these moves. TOAK's total short position is just 235 shares. ROPE's is only 213. At those levels, one small fund closing a minor hedge can cause a 90% percentage drop overnight. "These percentage changes are statistically noisy," one institutional analyst noted, suggesting the moves may reflect simple portfolio rebalancing rather than a broad market shift.
A separate concern surrounds HNDL specifically. Critics note that high-distribution funds can sometimes pay investors back their own money — known as return of capital — to meet yield targets. Low short interest may reflect a lack of liquidity for shorting rather than broad market endorsement of the fund's approach, according to Ticker Report.
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