Short Interest Ratio

AAA

DEFINITION of 'Short Interest Ratio'

A sentiment indicator that is derived by dividing the short interest by the average daily volume for a stock. This indicator is used by both fundamental and technical traders to identify the prevailing sentiment the market has for a specific stock.

Also known as the "short ratio".

Short Interest Ratio


INVESTOPEDIA EXPLAINS 'Short Interest Ratio'

This ratio provides a number that is used by investors to determine how long it will take short sellers, in days, to cover their entire positions if the price of a stock begins to rise. The short interest ratio can also be applied to entire exchanges to determine the sentiment of the market as a whole. If an exchange has a high short interest ratio of around five or greater, this can be taken as a bearish signal, and vice versa.

RELATED TERMS
  1. Short-Interest Theory

    A theory which holds that a security with a high degree of short ...
  2. Short Covering

    Buying back borrowed securities in order to close an open short ...
  3. Short Selling

    The sale of a security that is not owned by the seller, or that ...
  4. Short Squeeze

    A situation in which a heavily shorted stock or commodity moves ...
  5. Volume

    The number of shares or contracts traded in a security or an ...
  6. Days To Cover

    A measurement of a company's issued shares that are currently ...
Related Articles
  1. Active Trading Fundamentals

    The Short Squeeze Method

    The short squeezed strategy can be risky - but also very rewarding - for those who master it.
  2. Active Trading Fundamentals

    Short Interest: What It Tells Us

    This figure can be a real eye-opener about the market sentiment surrounding a given stock.
  3. Options & Futures

    Trader's Corner: Finding The Magic Mix Of Fundamentals And Technicals

    For a record-holding stock trader, CANSLIM is the formula that identifies this magic mix.
  4. Active Trading Fundamentals

    Where can I find the number of shares shorted on a specific stock?

    For general shorting information such as the short interest ratio, you can usually go to any website that features a stock quotes service. For example, you can find this information on the Yahoo ...
  5. Active Trading Fundamentals

    Short Selling Tutorial

    Want to profit on declining stocks? This trading strategy does just that.
  6. Trading Strategies

    How do I implement a forex strategy when spotting a Saucer Pattern?

    Understand the saucer pattern that indicates a bullish market reversal and learn a simple forex trading strategy devised to profit from the reversal.
  7. Trading Strategies

    How effective is creating trade entries after spotting a Saucer pattern?

    Understand the basics of the formation and interpretation of the saucer pattern and why it is a useful tool for the creation of an effective trade strategy.
  8. Trading Strategies

    How do I build a profitable strategy when spotting a Spinning Top pattern?

    Learn a simple, low-risk trading strategy that can be employed when a spinning top candlestick forms under certain circumstances in a market.
  9. Trading Strategies

    How do I build a profitable strategy when spotting a Saucer pattern?

    Understand the basics of the saucer pattern and how it is used to create a profitable trade strategy including formation, entry, stops and target price.
  10. Forex Strategies

    How do I implement a forex strategy when spotting a Runaway Gap Pattern?

    Read about some strategies to consider after spotting a runaway gap pattern in the forex market, including how to distinguish them from exhaustion gaps.

You May Also Like

Hot Definitions
  1. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  2. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  3. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  4. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  5. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  6. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
Trading Center