Orders and trading · updated October 21, 2026
What is a stock's short interest and how do you read it
Short interest shows how many of a company's shares have been sold short and not yet bought back, as a percentage of the shares available on the market. High short interest shows that many investors are betting on a falling price.
Short interest formula
- Shares sold short
- Open short positions, reported periodically (twice a month in the US).
- Free float
- The shares that can trade freely.
- Days to cover
- Short shares divided by average daily volume: how many days it would take to buy them all back.
Worked example
A company has 50 million shares available, of which 6 million are sold short. Average daily volume is 1.5 million.
If good news comes out, short sellers would need about 4 days of normal volume to get out.
How to read short interest
High short interest can be a warning (short sellers often study a company closely) or fuel for a sudden rally, if good news arrives.
When short interest can fool you
Delayed data: in the US the figures come out every two weeks, so they can be stale. Hedges: some short positions protect other investments rather than bet on a fall.
Related terms
Learn it in the Academy
Questions about short interest
Does high short interest mean the stock will fall?
Not necessarily. It shows that many expect a fall. Sometimes they are right; other times the price shoots up when they have to buy back.
These explanations are for information only. They are not a recommendation to buy or sell.
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