Glossary
Short Interest
The number of a company's shares currently sold short, usually shown as a percentage of shares available to trade.
Selling short means borrowing shares, selling them, and owing the lender those shares back later. Whoever does it profits if the price falls and loses if it rises. Short interest is the running total of shares in that state at a point in time.
The figure is reported on a lag, typically twice a month, so it describes a position that existed at a past date rather than right now. It is most often read as a rough gauge of how much money is positioned against a company.
Because short sellers eventually have to return the borrowed shares, they are future purchasers whether they want to be or not. When a heavily shorted stock rises quickly, that forced purchasing can push the price up further, a sequence known as a short squeeze. It is a description of a mechanism, not a prediction that one will occur.
Related terms
- FloatThe number of a company's shares actually available to trade, once restricted and closely held stock is excluded.
- VolumeHow many shares changed hands over a period, usually reported as the total traded during a single day.
- BetaA measure of how much a stock has moved relative to the market, where 1.0 means it moved roughly in step.
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