Understanding Short Interest
Lesson 2 of 66 min5 exercises
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Measuring Bearish Bets
Short interest is the total number of shares currently sold short. It's reported twice monthly and shows how many people are betting against a stock.
Key Short Interest Metrics
Short Interest % = Shares Short ÷ Float
- Below 10%: Normal
- 10-20%: Elevated
- Above 20%: High risk for shorts
Short Ratio (Days to Cover) = Shares Short ÷ Avg Daily Volume
- How many days it would take to cover all shorts
- Above 5 days: Significant squeeze potential
- Below 10%: Normal
- 10-20%: Elevated
- Above 20%: High risk for shorts
Short Ratio (Days to Cover) = Shares Short ÷ Avg Daily Volume
- How many days it would take to cover all shorts
- Above 5 days: Significant squeeze potential
Example
GME Example: - Float: 30M shares - Short Interest: 6M shares - Short %: 20% - Avg Volume: 2M/day - Days to Cover: 3 days
High short interest example
Tip
SUTOK displays short interest data including short %, days to cover, and squeeze potential rating.
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Key takeaways
- Short interest shows total shares sold short
- Short % above 20% is considered high
- Days to cover above 5 = squeeze potential
- Check these metrics for squeeze candidates
Next: 5 quick exercises. Miss one and it comes back at the end.