Short Interest Ratio

A ratio that indicates the number of trading days required to repurchase all of the shares that have been sold short for a specific security or for all the securities listed on a particular exchange over a given time (usually a month). For example. a short interest ratio of  2.0 would indicate that it would take 2-days, based on the previous month’s volume to cover all shorts. A high short interest is considered bullish because it represents stock that has to be purchased. A high ratio also indicates pessimism and from a contrary aspect is also bullish. This used to be a widely followed indicator, but the widespread use of options and index futures have distorted the numbers.