A rapid rise in leveraged exchange-traded funds (ETFs) tied to SK Hynix has triggered a surge in derivatives activity, with analysts estimating that ETF-related trading and associated hedging transactions now account for a majority of activity in the stock.
According to Leverage Shares analyst Sandeep Rao, these flows may represent as much as 60% to 70% of trading volumes in SK Hynix shares.
The development marks a shift in how investors are participating in the artificial intelligence boom. Instead of simply buying AI-related stocks, traders are increasingly gaining exposure through leveraged products, creating additional demand for derivatives and amplifying movements in the underlying shares.
The trend gathered pace after South Korean asset managers launched a series of leveraged ETFs linked to SK Hynix last month, building on the success of a similar product introduced in Hong Kong in late 2025.
Because these funds seek to deliver amplified returns, they must continuously rebalance their positions using options and other derivatives, creating a feedback loop between ETF demand and stock trading activity.
That impact is becoming increasingly visible. Open interest in SK Hynix options has surged nearly 17-fold within a month, reaching record levels. Market participants have also observed unusually large call option trades being executed outside regular trading hours.
The stock’s recent price action reflects the heightened volatility. SK Hynix fell nearly 8% on Monday before rebounding 16% the following day. The shares extended gains later in the week, rising as much as 9.7% on Friday.
Analysts say the rebalancing activity required by leveraged ETFs can intensify both upward and downward moves. Bloomberg Intelligence’s chief global derivatives strategist, Tanvir Sandhu, noted that a portion of the heavy call option activity may be linked to hedging requirements associated with these products.
The growing influence of leveraged ETFs has renewed debate about their effect on underlying assets.
Concerns are particularly pronounced in South Korea because SK Hynix carries significant weight in the benchmark Kospi index, accounting for roughly a quarter of its composition. While fund managers argue that daily portfolio adjustments have a limited impact on the market, some strategists remain cautious.
Shortly after the launch of the new Korean leveraged ETFs, Goldman Sachs highlighted the products as potential catalysts for higher volatility.
On one recent trading session when SK Hynix dropped as much as 11%, options turnover exceeded 400,000 contracts, a level of activity not seen in shares of Samsung Electronics for nearly a decade.
Despite concerns over market mechanics, analysts do not believe the stock’s rally is entirely detached from fundamentals. SK Hynix remains one of the key beneficiaries of the AI infrastructure buildout and demand for advanced memory chips.
However, derivatives experts say the stock may increasingly exhibit sharper momentum swings and greater intraday volatility as ETF-driven flows become a larger influence on trading behaviour.
