short interest versus percent of float short?
what is the difference and which is more important when buying a stock
- Anonymous9 years agoFavorite Answer
Short interest is the total number of shares of a particular stock that have been sold short by investors but have not yet been covered or closed out. This can be expressed as a number or as a percentage.
When expressed as a percentage short interest is the number of shorted shares divided by the number of shares outstanding. For example, a stock with 1.5 million shares sold short and 10 million shares outstanding has a short interest of 15% (1.5 million/10 million = 15%).
Most stock exchanges track the short interest in each stock and issue reports at month's end. These reports are great because, by showing what short sellers are doing, they allow investors to gauge overall market sentiment surrounding a particular stock. Or alternatively most exchanges provide an online tool to calculate short interest for a particular security. For example check out the Nasdaq's short interest calculator; it's very easy to use.
- Hops AficionadoLv 49 years ago
Short interest is the number of shares that have been shorted divided by the daily average trading volume on the stock. It's a measurement to see how many trading days it would take to cover all short positions, if 100% of the average volume were short covering.
Percentage of float is how many shares have been sold short as a percentage of how many shares are trading on the open market. Float is total shares outstanding minus any restricted shares.
Both of these numbers are important to determine is a stock is vulnerable to a short squeeze, which is a large spike in short-covering that moves the stock higher in the market.
- 9 years ago
You can find data regarding the short position in a stock in a number of places. A good place to start is which provides short interest data for stocks listed on the Nasdaq, as well as the New York Stock Exchange (NYSE) and the American Stock Exchange (Amex). The site is particularly helpful because it provides short interest data for each of the past 12 months, so you can see if the short position in a stock has been increasing or decreasing over the past year.
- 4 years ago
The key is do you believe what all the sheep are saying and thinking on the short term or do you look at this indicator as a inverse indicator and purchase the investment. Good luck...most of the time for a value investor this is a good reason to purchase .....much like the energy industry right now. 10/29/15