Short Interest
Short interest is the number of a company’s shares that have been sold short and not yet bought back. It is often shown as a percentage of the float. Days to cover divides short interest by average daily volume to estimate how long short sellers would need to close.
Short interest measures how many shares are currently sold short — a direct look at how many traders are betting on a decline. High short interest can mean informed pessimism, but it also creates fuel for sharp rallies when short sellers rush to buy back. This entry explains how short interest is measured, how to read days to cover, and what high readings do and do not mean.
- Category
- Fundamentals and Macroeconomics
- Reading time
- 4 min
- Also called
- Days to cover, Short interest ratio, Short float
- Updated
Short interest in plain words
Every share sold short must eventually be bought back.1 Short interest counts those open short positions. See Short Selling.
Days to cover asks: if short sellers bought back at the normal daily volume, how many days would it take? The higher it is, the more crowded the exit. See Short Squeeze.
How to read short interest, step by step
Find the figure
Exchanges or data providers publish short interest periodically, often twice a month in the US.2
Express it as % of float
Short interest ÷ shares available to trade.
Calculate days to cover
Short interest ÷ average daily volume.
Check the trend
Rising short interest shows growing bets against the stock.
Look for reasons
Fundamental problems, valuation, or hedging by other investors.
Combine with price
High short interest plus a breakout can start a squeeze. See Breakout.
Worked examples
Example 1 — The basic numbers
ReadingFloat 50 million shares, short interest 10 million, average daily volume 2 million.
| Short % of float | 20% |
| Days to cover | 10 million ÷ 2 million = 5 days |
A crowded short: buying back would take about a week of normal volume.
Example 2 — Squeeze fuel
SqueezeA heavily shorted stock reports surprisingly good results and gaps up 15%.
| Short sellers’ losses | Rising |
| Forced buying | Adds to the rally |
Good news plus high short interest can create outsized moves.
Example 3 — Shorts can be right
No squeezeA stock with 30% short interest keeps falling for months as its business weakens.
| Buyers betting on a squeeze | Losses |
High short interest is not a buy signal by itself; short sellers are often well informed.
Short-interest measures
| Aspect | Formula | Shows |
|---|---|---|
| Short interest | Shares sold short and not covered | Absolute size of bets |
| Short % of float | Short interest ÷ float | How crowded the trade is |
| Days to cover | Short interest ÷ average daily volume | How hard it is to exit |
| Borrow fee | Cost to borrow shares | How scarce shares are. See Borrowing Fee |
How traders use short interest
Squeeze screening
Finding crowded shorts that could rally sharply.
Risk check
Shorting a crowded name adds squeeze risk.
Sentiment
A gauge of how bearish professionals are. See Bear Market.
Event planning
Crowded shorts react strongly to earnings. See Earnings.
Advantages and disadvantages
Advantages
- Shows directly how many traders bet on a decline.
- Helps judge squeeze potential.
- Simple to calculate and compare.
Disadvantages
- Published with a delay.
- Includes hedges, not only directional bets.
- High readings can persist for a long time.
- Float definitions differ between data providers.
Going deeper
Read as far as you need. Each level builds on the one before it.
Shorts must buy back
Beginner
Every open short is future buying demand. That is why crowded shorts can rally violently on good news.
Not all shorts are bearish bets
Intermediate
Some short positions hedge other holdings, such as convertible bonds or options. They may not be closed just because the price rises. See Hedging.
Borrow availability
Advanced
When few shares are available to borrow, fees rise and new shorts become expensive — another sign of a crowded trade.
Common mistakes
Buying just because short interest is high
Short sellers are often right.
Shorting crowded names carelessly
Squeeze risk is high.
Using stale data
Check when the figure was measured.
Ignoring days to cover
Liquidity matters as much as the percentage.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Short interest counts shares sold short and not yet bought back.
- Express it as a percentage of float.
- Days to cover = short interest ÷ average daily volume.
- Crowded shorts can squeeze on good news.
- High short interest is not a buy signal by itself.
Frequently asked questions
What is considered high short interest?
How often is short interest published?
What causes a short squeeze?
Further learning
- Short Squeeze
What crowded shorts can lead to.
- Short Selling
How short selling works.
- Volume
The denominator of days to cover.
- Earnings
A common squeeze catalyst.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- Investor.gov (SEC). Investor Bulletin: An Introduction to Short Sales (opens in a new tab) Checked .
- FINRA. About Equity Short Interest (opens in a new tab) Checked .
Read more elsewhere
- Trading Metrics (our sister site): Short Interest Ratio (opens in a new tab)
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. Trading Metrics is our sister site, under the same ownership; we are not affiliated with any other publisher linked above. Last reviewed . Report an error or request a source credit.