Short interest data offers a look into investor sentiment and potential risk within the stock market and can help investors gauge how much skepticism or confidence the market has in a company’s future.
Understanding how short interest is calculated, reported and interpreted enables smarter decision-making and a deeper awareness of the forces shaping price movement.
- IBRX stock is heavily shorted. See the data here.
Here's a primer on what short interest is, where the data comes from and some ways it can be used by individual investors.
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What Is Short Interest Data?
Short interest measures the quantity of a stock's shares that are currently sold short but not yet repurchased. It is typically expressed as a percentage of the "float," or available shares, and sometimes as the "days to cover" ratio—calculated by dividing shares short by the average daily trading volume.
FINRA is considered the official source for short interest data in the United States, specifically for all exchange-listed and over-the-counter (OTC) equity securities.
FINRA collects short interest reports from broker-dealers twice each month, as mandated by FINRA Rule 4560, and publishes the reports to help investors gauge market sentiment.
Exchanges such as Nasdaq and NYSE also publish short interest figures for listed securities, but FINRA is required by regulation to collect and disseminate the information.
Some brokerages, like Robinhood Markets, Inc. (NASDAQ:HOOD) and Webull Corp. (NASDAQ:BULL) offer daily short interest data—which can vary—sourced from a mix of official exchanges, regulatory reporting and specialized financial data providers. For official short interest data, it is reported only twice monthly and is not a daily measure.
To provide clients with more frequent updates, brokerages and financial platforms often rely on specialized vendors such as ORTEX, S&P Global or S3 Partners. These providers aggregate data from several sources, including:
- Inventory feeds from agent lenders and prime brokers
- Broker-dealer internal data on lending and borrowing activities
- Regulatory filings from exchanges and FINRA
- Securities lending marketplace activity
Therefore, daily short interest data available to brokerage clients is typically an aggregation and estimation from these sources, not the official FINRA or exchange figure which remains semi-monthly.
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Interpreting Short Interest
High short interest signals notable bearish sentiment, indicating many investors expect the price to fall. For example, if 15% of a company's float is sold short, the market views that stock with skepticism.
However, excessively high short interest can have the opposite effect: if positive news triggers buying, short sellers may rush to cover their positions, driving the stock sharply higher—a phenomenon known as a short squeeze.
Low short interest, on the other hand, implies general market confidence in the stock's outlook and limited downside risk for investors.
How to Use Short Interest Data
Short interest data can be used in several ways by traders and investors to spot opportunities, manage risk and understand market sentiment.
Trading Strategies and Squeeze Setups
- Traders use high short interest to identify stocks ripe for a potential short squeeze.
- Some screen for extreme short-interest stocks to build contrarian long positions, expecting a squeeze if positive catalysts appear.
Sentiment Analysis
- Short interest reflects market sentiment—rising short interest indicates bearish sentiment, while declining levels suggest shorts are unwinding and sentiment is improving.
- A dramatic spike in short interest following a price drop can signal maximum bearishness, sometimes indicating a possible rebound as the negative sentiment is "overbaked".
Risk Management and Confirmation
- A sudden increase in short interest may signal crowding and elevated downside risk, prompting caution or hedging.
- Low short interest can imply stability and limited downside risk, while shifting levels can help confirm trade setups when paired with volume and price data.
- Investors use short interest data along with technical or fundamental indicators to validate signals before entering or exiting trades.
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Portfolio and Screeners
- Some investors track short interest across sectors or the overall market to gauge broad sentiment shifts.
- Advanced platforms, like Benzinga Pro, allow traders to incorporate short interest metrics into custom stock screens for ongoing idea generation.
In all cases, context is critical—short interest is best used alongside other measures such as volume, float and price action to maximize its effectiveness.
The Takeaway:
Effectively using short interest data involves much more than just glancing at a percentage figure.
Official sources like FINRA and major exchanges publish twice-monthly snapshots, while daily estimates from brokerages aggregate a range of market activity and may vary in accuracy.
By combining short interest with other analytical tools—such as trading volume, float size and price action—investors can spot signs of heightened risk, potential squeezes, or shifts in sentiment for individual equities and the broader market.
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