Andrew’s Corner — By MoneyTurkey editors 3 November 2026
Tuesday’s rout in Taipei and Seoul was real in cash and in futures. In the options books it barely registered as fear: traders added calls far faster than puts. That mismatch is the most interesting thing about the day, and it may matter more than the drop itself.
Some days the price tells you everything. Tuesday was not one of them.
On the face of it, Asia’s AI and semiconductor trade had a bad day. The TAIEX lost 1,612.6 points to close at 43,307.54, down 3.59 per cent — the seventh-largest points decline in the index’s history. Turnover was roughly NT$928bn, heavy enough to rule out a thin-market wobble. MediaTek fell 7.43 per cent. TSMC, the stock everyone watches, slipped a comparatively polite 1.5 per cent. In Seoul the KOSPI also fell 3.59 per cent, to 5,648.79, and the KOSPI 200 dropped about 3.8 per cent to 885.67.
Anyone reading only the cash tape would conclude that the region had finally lost its nerve over the chip trade. The derivatives market says something more complicated.
The futures panicked. The options did not.
Start with futures, where the fear was plain. Taiwan’s November TX contract settled at 43,353, down 4.14 per cent — sharper than the cash index, which is how futures behave when people hedge in a hurry. Foreign institutional investors ended the day net short 91,812 TX contracts. That is a large, deliberate bearish position. Whatever else happened on Tuesday, overseas money was positioned for more pain, or at least protected against it.
Now look at the TXO options book, where you might expect that fear to show up as a rush into puts. It did not. Call open interest rose by about 45,879 contracts on the day. Put open interest rose by only about 6,280. By the close there were 159,184 calls outstanding against 76,050 puts. The put/call open-interest ratio fell to 47.77 per cent from 61.58 per cent the session before.
On a seventh-largest-ever points decline, the options market became noticeably less defensive.
Our Options desk set out the detail earlier today, and I will not repeat the strike-by-strike picture here. The overall shape is enough. On the day the cash market lurched lower, the open positions that will decide the next few weeks tilted towards the upside.
Who was buying, and who was selling
Taiwan’s exchange data lets us go a step further, as long as we are careful. Investment trusts finished the day net short calls — writing upside, collecting premium on the view that a sharp rebound would be limited, or using calls to fund protection elsewhere. The three institutional groups tracked by the exchange were, taken together, net sellers of calls and net buyers of puts. That leaves individuals, by implication, on the other side of much of the new call buying.
I would not read too much motive into those positions. A net short call can be a directional view, an income strategy or one leg of a structure we cannot see. A retail call buyer may be a long-term believer in the AI story or a gambler after a cheap lottery ticket. Position data does not tell you what anyone was thinking.
But the pattern is familiar. Professionals wrote upside and hedged the downside through futures. Retail treated a 3.6 per cent drop as a sale. Both groups took part in the same sell-off, and neither behaved as if it were the start of a collapse.
Seoul arrived already leaning long
Korea makes the point even more clearly, because its options book was positioned before the drop. On Monday 2 November, going into Tuesday’s session, the November KOSPI 200 options series held 132,160 calls against 60,058 puts — roughly two calls for every put. At the same time VKOSPI, Korea’s volatility index, stood at 53.34.
That combination is unusual. A fear gauge above 50 normally goes with stress, forced hedging and investors paying up for puts. Instead, Korea’s main options series was heavily weighted towards calls. The market was paying for volatility while still betting, on balance, that the move would be upwards. At the single-stock level, our desk found SK Hynix options running at about 28 calls per put before the shares fell around 5 per cent.
You can read that two ways. The optimistic reading is that options traders have learned that AI sell-offs tend to be bought, and are pricing the same again. The sceptical reading is that a call-heavy book with implied volatility above 50 does not show conviction at all. It shows crowding, and crowded positions tend to unwind suddenly.
I lean towards the sceptical view, without being certain.
Why the mismatch matters
When cash and futures price fear but options still price recovery, one of the two is going to be wrong, and the correction tends to happen around expiry.
Taiwan’s weekly options expire on Wednesday 4 November. The largest call open interest in that contract sits at the 46,000 strike; the largest put open interest at 43,000 — only just below Tuesday’s close of 43,307.54. The monthly contract expires on 18 November, with the big call and put walls at 50,000 and 40,000. In Korea, the November series expires on 12 November with the call skew described above. All of this sits under the US midterm elections, close enough to affect risk budgets everywhere.
If the dip-buyers are right, the large call positions will look smart and the foreign futures shorts will have to be bought back. Short-covering in futures can drive a rebound faster than anyone expects. If they are wrong, and the cash market keeps falling towards those put levels, call holders lose their premium quickly, call writers keep theirs, and the hedging that follows could make the fall worse. A call-heavy book offers no cushion on the way down.
I am not prepared to say the options market is “calm”, or that it knows something the cash market does not. Options books are made of people with the same biases as everyone else; they are simply slower to change their minds.
The take
Tuesday’s headline numbers say Asia sold the chips. The more telling figures say it did not give up on them. Put/call ratios fell while indices crashed. Calls kept accumulating while Korea’s volatility gauge sat above 50. Foreign futures shorts grew while trusts sold upside to individuals happy to buy it.
That is not a market that has capitulated. It is a market split down the middle: hedged in one instrument, optimistic in another. Splits like that rarely last. Watch Wednesday’s expiry in Taipei, watch whether the foreign short is covered or added to, and watch whether Seoul’s call-to-put ratio holds once volatility starts to come down. The cash tape showed us the fear. The options books will show us whether it was justified.
Price falls when people are afraid. Positions only change when they give up. Tuesday we saw the first and not yet the second. — Andrew
This article is commentary and reflects the author’s opinion. It is not investment advice and should not be relied upon as a recommendation to buy, sell or hold any security or derivative. Derivatives carry significant risk, including the loss of more than your initial investment. Do your own research or consult a qualified adviser.
