SK Hynix options debut trails memory ETF and Micron activity

Options tied to SK Hynix’s U.S.-listed shares began trading Tuesday, with about 150,000 contracts changing hands by midday even as the stock was up more than 20%, according to Cboe LiveVol data cited by CNBC. The activity was notable for a first session, but it lagged the derivatives volume in several memory and artificial-intelligence semiconductor trades, including the Roundhill memory ETF and Micron.

SK Hynix’s U.S. shares traded at $188.10, up $35.75, or 23.47%, at 3:25 p.m. EDT, according to market data displayed by CNBC. The South Korean memory-chip maker recently completed a U.S. American depositary receipt offering that raised $26.5 billion, Bloomberg reported, making it the largest U.S. first-time share sale by a foreign company.

Options volume was active but not dominant

Cboe listed five monthly expirations for the new SK Hynix contracts, covering the third Friday of July, August, September and December, as well as March 2027. Options give buyers the right, but not the obligation, to buy or sell an underlying security at a specified strike price before expiration. Calls are typically linked to upside exposure, while puts are tied to downside exposure, though multi-leg trades and sales of options can express more complex positions.

LiveVol data showed more SK Hynix calls traded than puts by midday. Even so, the largest directional activity by volume was call selling, according to CNBC’s report on the data. A call seller receives premium upfront and assumes the obligation to deliver shares if the option is exercised, a structure that can be used to collect income, hedge, or position against further gains depending on the trader’s broader book.

SK Hynix’s roughly 150,000 contracts exceeded the approximately 110,000 contracts traded in the VanEck Semiconductor ETF, ticker SMH, and were nearly twice the volume seen in Sandisk or Marvell, according to CNBC, citing LiveVol. The figures were still less than one-third of the volume in either the Roundhill memory ETF, ticker DRAM, or Micron, each of which traded about 380,000 contracts Tuesday. Nvidia options volume was about 2.3 million contracts at the time cited by CNBC.

Leveraged ETFs drew attention around the listing

CNBC reported that almost a dozen exchange-traded fund issuers had filed for leveraged single-stock funds linked to SK Hynix, with many starting to trade Tuesday. Leveraged single-stock ETFs use derivatives and financing techniques to target a multiple of a company’s daily share-price move, either long or short. Those products can attract short-term speculative flows that might otherwise appear in listed options.

The Roundhill memory ETF has also become a major vehicle for investors seeking exposure to the memory-chip supply chain. CNBC reported that the fund has $23 billion in assets and that SK Hynix is its third-largest holding.

Scott Bauer, chief executive of Chicago-based Prosper Trading Academy, told CNBC that leveraged long and short ETFs may have absorbed some demand that could otherwise have gone into the options market. He added that volume could increase once weekly options are listed.

The largest trades in SK Hynix options Tuesday appeared to involve one trader selling more than 2,200 July 17 calls with a 180 strike, according to LiveVol data cited by CNBC. The contracts brought in about $9 each, for a sale of roughly $2 million. LiveVol characterized the seven largest single trades by volume as bearish, CNBC reported.

This story draws on original reporting from CNBC.