Investors are now collectively betting against a trading target they once flocked to, even as its price continues to fall.

On Tuesday, components of the VanEck Semiconductor ETF (SMH.US) saw widespread declines. The ETF has now pulled back more than 10% from the record high it set last week, and options traders are wagering the downtrend will intensify.

Data from ThinkOrSwim shows that by midday Tuesday, put option volume was four times that of call options, with traders buying over five times more puts than calls.

SpotGamma data indicates that of the nearly $350 million in option premium traded for SMH that day, $260 million was in put options.

For investors who were previously heavily positioned long on AI hardware stocks, this price action represents a harsh reversal.

For options traders who have been leaning bearish recently, the persistent influx of put buying during the sell-off signals that some of the previously staunchly bullish capital within the sector is shifting to other areas.

In a phone interview, Don Kaufman, co-founder of TheoTrade, stated, "Friday's sell-off is absolutely not a one-off event. These buyers of SMH put options will force market makers to short the underlying stocks or sell Nasdaq futures, creating a feedback loop very similar to the one during the prior rally. When fund managers or retail investors panic, the decline could be amplified further."

The bearish sentiment surrounding SMH has also spread to the tech-heavy Nasdaq 100 index, with options activity for the Invesco QQQ ETF similarly skewed toward the downside.

Of the $3.7 billion in option premium traded for QQQ on Tuesday, approximately $2.5 billion was in put options.

By both premium value and volume, the most active QQQ contract was the in-the-money $700 strike put expiring Tuesday, with a premium value of $44 million; the next was the $715 strike put expiring next Monday, with a traded value of $35 million at the time of writing.

As market conditions deteriorated on Tuesday, even the Roundhill Memory ETF (DRAM.US), which previously had more stable bullish sentiment and balanced overall volume, began turning pessimistic.

Traders bought over 24,000 put contracts in this ETF, compared to fewer than 15,000 call contracts.