Days to cover
Also called: short interest ratio, short ratio, days-to-cover ratio
Short interest divided by average daily trading volume; a rough estimate of how many days of normal trading it would take for all short sellers to buy back their shares.
Last verified
How it is calculated
Days to cover = Shares sold short ÷ Average daily trading volume
Short interest is the number of shares sold short and not yet repurchased. In the US, broker-dealers report it to FINRA twice a month, for settlement dates around the middle and the end of each month, and the figures are published about a week and a half later. Average daily volume is usually taken over a recent window, such as 20 or 30 trading days.
Worked example
Hypothetical: Company X has 3,000,000 shares sold short and trades an average of 600,000 shares a day. Days to cover is 3,000,000 ÷ 600,000 = 5.0. If volume rises to 1,500,000 shares a day while short interest is unchanged, days to cover falls to 2.0.
| Short interest | Avg daily volume | Days to cover |
|---|---|---|
| 3,000,000 | 600,000 | 5.0 |
| 3,000,000 | 1,500,000 | 2.0 |
All figures are hypothetical.
Why it matters
Days to cover gives context that a raw short interest number lacks. A short position of 3,000,000 shares means something different in a stock that trades 300,000 shares a day than in one that trades 30,000,000. Traders often read it alongside short interest as a percentage of float.
Limits of the measure
- Stale inputs. Short interest is reported twice a month with a lag, so it can be out of date by the time it is read.
- Volume swings. A single high-volume day can change the ratio sharply. See relative volume.
- Not a timeline. Short sellers do not need to cover on any schedule, and the ratio says nothing about when or whether they will.
How to spot it
FINRA publishes short interest data, and the company page on Signal8 has a shorts tab. See Short interest and borrow.
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