Options Traders Are Buying the Dip on This Software ETF

Last month, the iShares Expanded Tech-Software Sector ETF (BATS:IGV) officially entered bear market territory. The ETF has suffered amid fears that AI will disrupt business models across the sector, with a dismal post-earnings bear gap from Microsoft (MSFT) -- the fund's top holding -- adding fuel to the fire.

IGV is down 3.2% to trade at $82.67 today, and last Thursday traded as low as $81.53, a chip shot from its April 7 low of $86.78. The ETF is down 21.6% year to date already, thanks in large part to a 14.5% January drawdown that was its worst month since October 2008. Keep an eye on the 14-Day Relative Strength Index, last seen at 29 and coming off severely "oversold" status.

Don't tell that to call traders though. IGV's 50-day call/put volume ratio of 2.79 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 100th percentile of its annual range. The most popular contracts right now are the March 85 call and April 90 call, per Trade-Alert.

Echoing this, the ETF's Schaeffer's put/call open interest ratio (SOIR) of 0.27 stands in the 3rd percentile of its annual range.