SK Hynix options debut as memory-chip ETFs draw bigger action

SK Hynix options started trading in the U.S. on Tuesday, giving investors a new way to bet on the South Korean chipmaker without buying the shares directly. The early action showed plenty of interest, but much of the speculative energy around memory chips appears to be flowing into ETFs and other chip names instead.

The company’s U.S.-listed shares were up 23.47% to $188.10 as of 3:25 p.m. ET, according to CNBC market data. The move followed SK Hynix’s U.S. listing, after the company raised $26.5 billion in an American depositary receipt offering, CNBC reported.

Options trading starts with moderate volume

Roughly 150,000 SK Hynix options contracts had changed hands by midday Tuesday, according to Cboe LiveVol data cited by CNBC. Options are contracts that give traders exposure to a stock’s price moves. A call option usually benefits when the stock rises, while a put option usually benefits when it falls.

More calls traded than puts in SK Hynix, but the most active directional trade by volume was call selling, according to the LiveVol data. Selling calls can be a bearish or income-focused trade, depending on whether the trader owns the stock or is using the position on its own.

Cboe listed five monthly expirations for the contracts: July, August, September, December and March 2027, CNBC reported. An expiration is the date when an options contract stops trading and must be exercised or allowed to expire.

Micron, DRAM ETF and Nvidia draw larger options activity

SK Hynix options volume topped the roughly 110,000 contracts traded in the VanEck Semiconductor ETF, ticker SMH, and was nearly twice the activity seen in Sandisk or Marvell, according to CNBC’s report. Even so, it was far below trading in other memory-chip-related instruments.

The Roundhill memory ETF, ticker DRAM, and Micron each saw about 380,000 options contracts trade Tuesday, according to CNBC. Nvidia was in a different tier, with about 2.3 million contracts traded as of CNBC’s report.

Exchange-traded funds, or ETFs, are baskets of securities that trade like stocks. The DRAM ETF has grown to $23 billion in assets, and SK Hynix is its third-largest holding, CNBC reported. That gives investors another route to gain exposure to the memory-chip theme without trading SK Hynix directly.

CNBC also reported that nearly a dozen ETF issuers filed for leveraged single-stock funds tied to SK Hynix, with many beginning trading Tuesday. Leveraged funds use financial tools to magnify daily moves, which can increase both gains and losses.

Scott Bauer, CEO of Chicago-based Prosper Trading Academy, told CNBC that demand for double-long and double-short ETFs may have reduced some options activity in SK Hynix. He also said volume could increase once weekly options are listed.

Big early trades skew bearish

The two largest trades of the session appeared to come from one trader who sold more than 2,200 July 17 calls with a $180 strike price, according to CNBC, citing LiveVol. The contracts brought in about $9 each, for an estimated sale of roughly $2 million.

The strike price is the level where an option can be exercised. CNBC reported that those contracts were nearly at the money, meaning the strike price was close to the stock’s current trading price.

LiveVol data showed the seven largest individual trades by volume were all bearish, CNBC reported. That early pattern does not settle the broader market view on SK Hynix, but it shows that the first day of options trading was not dominated by aggressive call buying despite the stock’s sharp rally.

This story draws on original reporting from CNBC.