Guess what. All those Evil Shorts that single handedly toppled those perfectly healthy financial giants? You know, the one's that got "pantsed" by Monday's rule change that wasn't actually a rule change?

Turns out they haven't exactly closed up shop. Many have apparently just moved into options. This from the dow%20jones">Dow Jones newswires via MarketBeat (hat tip Abnormal).

The Securities and Exchange Commission’s move to curb “naked” short selling may have blunted some of the selling pressure on financial stocks. Or, it may have just driven that business into the options market.

Options traders don’t appear to have been infected by the recent optimism in financial shares that erupted when the SEC decided to require investors to “pre-borrow” shares of 19 financial companies before selling them short. This week, options to sell bank stocks continued to see much higher demand than options to buy. And for 11 of the 15 firms on the SEC’s list for which options trade in U.S. markets (19 firms were named in total), the ratio of puts to calls has actually widened.

“Our customers are looking for an aggressive pullback in financials, and to make that play now, they’re buying puts and selling calls,” said a trader at a mid-sized New York brokerage.

For example, HSBC Holdings PLC has seen its outstanding put-to-call ratio climb to 2.2 as of Tuesday’s close from 1.9 earlier this month, according to data from TradeAlert. That’s the case even though the bank’s stock has climbed 16% since the SEC announced its new rule last week. Wednesday, 27,000 put options on HSBC stock traded, compared with 3,000 calls, even as the stock climbed another 1.7%. Puts are options to sell a stock at a later date at a given price, and a higher ratio suggests more bearishness.

The divergence between the views being expressed in the options and stock markets is unusual. It could be that investors are using put options to hedge their purchases of financial stocks, but the volumes seem too big for that.

Another example is Merrill Lynch & Co. Stock traders have driven the bank’s shares up 37% since July 15. Options investors, however, appear to be thinking Merrill could see more pain. The put-to-call ratio for Merrill climbed to 1.9 Tuesday from 1.6 for much of July.

A couple things I want to note here.

One is that it's a perfect example of why to always exercise extreme caution divining meaning into option volume and put/call ratio's. It's highly likely all that happened here, and other spots, was that shorts simply switched to puts, or put/call combo's (conversions). I'm sure in a vacuum, all this put trading set off some tripwires, which is why you have to think about what actually happened. Was this bullish or bearish? Really neither, it's as much clerical as anything else.

Two is that with all the derivative products out there, and regular Wall Street all too happy to create in-house anything doesn't already exist, all but impossible to actually end bearish bets. If that is something that is even desirable.

So I would just like to say, there's certainly nothing wrong with rules that curtail the naked shorting. And it's patently ridiculous and criminal to have willfully not enforced the rules already on the books. But anyone hanging their hat that this SEC action will have any legs beyond the short term squeeze that may have already run it's course, stands to be sorely disappointed.