Options traders add to short bets on software company loan ETFs, reaching record high since 2023

# Long Yue

Hindered by an **18% exposure to software industry loans**, the Invesco Senior Loan ETF has come under heavy short selling, with put option contracts surging to 400,000 and open interest hitting a multi-year high since 2023. Meanwhile, the fund has seen nearly **$1 billion** in outflows over four straight weeks, and investors have aggressively closed out bullish call positions on software sector ETFs. Faced with persistently weak sector performance, market capital has effectively **thrown in the towel**.

As concerns over the software industry’s outlook spread from equities to credit markets, traders are ramping up record bearish option bets against the ETF holding large amounts of software company loans.

Traders in the U.S. options market are piling into **put options on the Invesco Senior Loan ETF (ticker: BKLN)**.

The fund tracks a leveraged loan index, with its positioning at the core of the trade: according to data from Susquehanna International Group, roughly **18% of the fund’s exposure** consists of loans to software firms, including well-known names such as McAfee and Proofpoint.

Bearish bets have escalated sharply over the past three weeks. Data shows total put option contracts have surpassed **400,000** (equivalent to 40 million shares), pushing open interest in BKLN puts to the highest level since 2023.

### Short-bet positioning hits lowest level since April 2024

Monday’s trading details reinforced investor pessimism.

One investor bought **30,000 April put contracts** on BKLN with a strike price of $20. Estimates suggest the position breaks even if the fund falls 3.5% to break below its April 2025 low.

This was followed by even more aggressive positioning: another **50,000 put contracts** traded, targeting a similar decline by mid-July.

### Capital flees for four weeks in a row

Beyond aggressive shorting in options, cash-market flows have been extremely weak.

As of Monday’s close, BKLN fell roughly 1% to **$20.44**, marking its lowest level since April 10, 2025 — a period roiled by tariff volatility.

More worryingly, the ETF has recorded **four consecutive weeks of outflows**, totaling nearly $1 billion.

Monday’s activity is likely to push overall bearish positioning even higher. A series of trades last week already showed investors scrambling to hedge downside risk via put options.

Data indicates one or more investors bought a total of **250,000 July $20 put contracts** last week, adding to 100,000 April $20 puts purchased in early February.

### From “buying the dip” to “throwing in the towel”

The collapse in sentiment appears not only in shorting credit but also in abandoning bounce bets on software stocks.

Traders sold **March $92 call options** on the iShares Expanded Tech-Software Sector ETF (IGV), unwinding positions built roughly two weeks earlier during a sharp selloff in software companies.

This signals investors no longer expect a near-term rebound in the software sector.

Commenting on the capitulation, Susquehanna International Group said bluntly in a Friday note:

> “With the sector continuing to underperform, investors are throwing in the towel.”

Source: Wall Street CN

---

## Risk Warning & Disclaimer

The market involves risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situations, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment decisions based on this article are at the user’s own risk.