Short Interest

Short interest shows how many shares of a stock are currently held short by investors. It is a rough gauge of how many market participants expect the price to fall. In the US, exchanges and FINRA publish short interest data on a regular schedule, so the figures are always somewhat delayed.

Short interest is usually put in context in two ways. Short interest as a percentage of float compares shorted shares with the shares available for public trading. Days to cover, also called the short ratio, divides short interest by average daily trading volume to estimate how many days it would take short sellers to buy back all their shares.

High short interest can mean that many investors see problems with a company. It can also set the stage for a short squeeze if the price starts rising. Low short interest means few investors are betting against the stock.

Example: a company has 50 million shares in its float, 10 million of which are sold short. Short interest is 20% of float. If average daily volume is 2 million shares, days to cover is five.