Short Interest - Explanation, Importance, and Calculation

Understanding Short Interest | Test Prep

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Question

Short interest is -

Answers

A. the cumulative number of shares that have been sold short by investors and not covered. * the cumulative number of shares that have been sold short.

B. the cumulative number of shares that have been sold short and covered.

C. the cumulative number of shares that have been sold short, divided by daily NYSE volume.

D. the cumulative number of shares that have been sold short, divided by daily NYSE + OTC volume.

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Explanations

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A. B. C. D.

Technical analysts measure short interest through the short interest ratio, which is equal to the outstanding short interest divided by the average daily volume of trading on the exchange. A higher ratio is interpreted as bullish, because a larger relative short interest is indicative of high potential demand for stock from those that have sold short but have not yet covered.

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