Chip stocks have been a major culprit behind the tech sector correction in June. The VanEck Semiconductor ETF (SMH) has shed 9% from its June 3 record high of $642.77, last seen up 2.1% at $582.99, drifting dangerously close to official correction territory. During this profit-taking, option traders have shown an increased appetite for puts.
SMH's 10-day put/call volume ratio of 7.41 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 96% of annual readings. Echoing this, the ETF's Schaeffer's put/call open interest ratio (SOIR) of 3.18 ranks in the 100th percentile of readings from the last year.
Looking at individual contracts, the July 440 put is one of the top trades during this time frame, while the short-term June 520 put is also seeing notable activity.
From a technical standpoint, SMH remains supported from its uptrend formed from the late-April breakout. Year-to-date, the ETF is up 63.5%, and 125% in the last 12 months.
