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. Days To Cover

    A measurement of a company's issued shares that are currently ...
  6. Volume

    The number of shares or contracts traded in a security or an ...
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. Forex Strategies

    Are Doji patterns important when trading forex pairs?

    Find out why forex traders make heavy use of candlestick patterns such as the doji, which can be used as a signal of market indecision and coming breakout.
  7. Trading Strategies

    How effective are double tops in spotting a change in the overall trend?

    Learn about the double top price chart pattern, a commonly appearing indicator used to establish resistance levels and possible trend reversals.
  8. Forex Strategies

    What are the most common momentum oscillators used in forex trading?

    Explore two frequently used momentum indicators in forex trading, the moving average convergence divergence, or MACD, and the relative strength index, or RSI.
  9. Trading Strategies

    What does it mean when a stock is trading near the Donchian channel, high or low?

    Learn how Donchian channels can be used to spot overbought or oversold positions and how to react to these signals to make a profit.
  10. Trading Strategies

    Is using the Donchian channel more risky or more conservative than using Bollinger BandsĀ®?

    Read about differences between Bollinger Bands and Donchian Channels, and learn why the latter are considered to be a riskier trading tool.

You May Also Like

Hot Definitions
  1. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  2. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  3. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  4. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  5. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  6. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
Trading Center