The Zhitong Finance App learned that SK Hynix (SKHY.US) American Depositary Receipts (ADR) surged more than 27% on Tuesday, not only completely recovering the 9.3% decline in the previous trading day due to a record wave of sell-offs in the Korean stock market, but also driving the stock's premium to 51% compared to common stocks listed in South Korea just three days after entering the US stock market for trading, which is far higher than the surplus price of about 3% during the initial public offering (IPO) last week. Due to restrictions on the conversion of Korean common stock to US ADR, the market previously expected SK Hynix's ADR price to be higher than its corresponding stock price in the Seoul market.
SK Hynix ADR's sharp rise on Tuesday coincided with the official start of trading of the stock options on the US Options Exchange, making it easier for traders in the world's largest derivatives market to participate in the highly volatile South Korean memory chip manufacturer's transactions.
As of early trading of US stocks on Tuesday, SK Hynix ADR options had traded about 33,000 contracts, of which more than two-thirds were short-term options due this Friday. Judging from the transaction situation, the most active transaction was the call option with an execution price of 185 US dollars, with a trading volume of about 2,900; the put option with an execution price of 145 US dollars followed. In addition, call options that expire in August and have an execution price of $200 are also highly sought after by the market, with a trading volume of more than 1,500.
Daniel Kirsch, head of Piper Sandler's options business, said that investors are expected to mainly lay out short-term trading opportunities for SK Hynix ADR to continue to rise this week. He pointed out that with the official listing of SK Hynix ADR options, retail investors are expected to pour in rapidly, so short-term call options due this Friday may become the most popular type of trading.
In addition to the increase in SK Hynix ADR itself, the increase in premium is also related to the recent pullback of SK Hynix's common stock listed in Korea. After SK Hynix completed the US stock listing last Friday, valuation liquidation triggered by extreme positions, leveraged capital, favorable cashing, and falling profit expectations caused SK Hynix's common stock listed in Korea to drop by a record of more than 15% in a single day on Monday.
In addition to investors' profit settlement, a report released by Korea Investment Securities (KIS), a local Korean brokerage firm on Monday was seen as the trigger for SK Hynix's stock price to plummet. Although KIS's forecast for SK Hynix's second-quarter results is quite impressive, the bank's operating profit forecast is about 8% lower than the market consensus forecast of 65 trillion won. This has inflamed investors' concerns. However, the brokerage firm also stated that this is only a normalization adjustment to profit forecasts after considering high-bandwidth memory (HBM) long-term supply agreements (LTAs), and does not mean that the industry's growth rate is slowing down.
Some analysts pointed out that compared to peers, SK Hynix's high-bandwidth memory (HBM) accounts for a higher share of revenue, and the average sales price (ASP) increase is lower than the industry average. HBM usually locks in prices with long-term supply agreements, so there will be no significant changes in the short term according to market conditions. In contrast, when the overall price of the market rises, the average sales price of traditional DRAM and NAND products increases even more.
Although the KIS Index, long-term supply agreements limit price explosiveness, they also improve profit stability and reduce the long-term volatility of the memory industry. In the future, the market's valuation logic for storage companies will be reshaped, and more emphasis will be placed on the sustainability of profits rather than the scale of short-term profits.
Although KIS is still optimistic about SK Hynix and emphasizes that its latest report does not mean that corporate profits have deteriorated or industry growth is slowing down, investors are extremely sensitive to operating profit “falling short of market expectations” in the second quarter, so they sold SK Hynix shares one after another on Monday.
From a technical perspective, this round of sharp decline has pushed SK Hynix's common stock listed in Korea into the oversold range. Some analysts believe that short-term buying opportunities are being formed. In particular, the stock price has fallen to a high level of nearly 40%. Nico Rosti, a senior analyst at MRM Research, said that the stock price of SK Hynix's common stock listed in Korea is currently showing “deep oversold” characteristics. “Another week of decline is possible, but we see this as a major opportunity to increase our positions/increase our holdings. The rebound in the Korean market should push ADR higher even more sharply, so this is a good time to buy”.
Furthermore, according to Wall Street giants such as Bank of America and Nomura, and top market research institutes such as SemiAnalysis, this round of global memory chip and even AI computing power infrastructure investment-themed stocks generally plummeted closer to extreme expectations, extremely leveraged positions, and centralized liquidation of overcrowded bullish positions, rather than a sudden collapse in industrial demand. Profit returns after the listing of SK Hynix's US stocks, the misalignment of valuation between local Korean stocks and US depository receipts, and centralized liquidation of leveraged funds have all amplified price fluctuations.
SemiAnalysis expects SK Hynix's comprehensive DRAM average sales price (ASP) to rise by about 45% month-on-month in the second quarter of 2026, and the operating profit of the DRAM project will reach 55 trillion won. The company's operating profit margin is expected to reach an all-time high. The SemiAnalysis report clearly states “Be Greedy When Others Are Fearful (Be Greedy When Others Are Fearful)” and emphasizes that despite recent sharp fluctuations in memory chips causing investor concerns, SK Hynix and other leading storage companies “are still one of the most attractive risk-to-return targets in the semiconductor industry.”