Short Interest Theory

Filed Under » ,
Dictionary Says

Definition of 'Short Interest Theory'

An investment theory that states that the price of a security will eventually have to rise after a period of heavy short selling. The short interest theory has the price increase occurring because investors who sell the security short will have to repurchase shares in order to cover their short trades.
Investopedia Says

Investopedia explains 'Short Interest Theory'

Bullish investors may see a high volume of short interest as an opportunity. They may look at the short interest ratio, which is the number of shares sold short divided by the total share volume. A high ratio may show that the time is ripe to pick up shares of the stock, since the short interest theory says that shares should increase in price.

Articles Of Interest

  1.

    Short Interest: What It Tells Us

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

  2. The Truth About Naked Short Selling

    The media demonizes naked short selling, but in most cases it occurs in a collapse, rather than causing it.

  3. Benefit From Borrowed Securities

    Find out what your broker is doing with your securities when you invest on margin.

  4. Short Selling Tutorial

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

  5. Weighted Average Cost Of Capital (WACC)

    Weighted average cost of capital may be hard to calculate, but it's a solid way to measure investment quality

  6. Exploring The Current Account In The Balance Of Payments

    Learn how a country's current account balance reflects the country's economic health.

  7. Taking Shots At CAPM

    Find out why many investors think the capital asset pricing model is full of holes.

  8. George Soros: The Philosophy Of An Elite Investor

    George Soros spent decades as one of the world's elite investors, and even he didn't always come out on top. But when he did, it was spectacular.

  9. Understanding And Playing The Dow Jones Industrial Average

    Learn strategies for investing in this price-weighted index and how to interpret its movements.

  10. Introduction To International CAPM

    ICAPM is one of several models used to determine the required return on an asset, discover its limitations and how to use it.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Yield Elbow

    The point on the yield curve indicating the year in which the economy's highest interest rates occur. The yield elbow is the peak of the yield curve, signifying where the highest interest rates occurred.

  2. Xenocurrency

    A currency that trades in markets outside of its domestic borders.

  3. Wanton Disregard

    A standard of severe negligence. Wanton disregard is a very serious accusation that indicates that a person behaved extremely recklessly.

  4. Ultra ETF

    A class of exchange-traded funds (ETF) that employs leverage in an effort to achieve double the return of a set benchmark.

  5. Toehold Purchase

    A purchase of less than 5% of a target company's outstanding stockmade by an acquiring company. A toehold purchase of just under 5%, while not a significant stake in a firm, allows the shareholders a "toe-holds" grip on the company and its decision making.

  6. Samurai Bond

    A yen-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations.
Trading Center
http://sp.fastclick.net/ad/tr/10858-64082-15546-0?mpt=726da8218c888968df21fe8b17f7e8a5