What Is Short Interest? How FINRA Counts Open Short Positions

Short interest is the number of a company's shares that are sold short and not yet bought back, counted from broker reports on two settlement dates a month.

It is the most quoted measure of how much of a stock is sold short, and it is often confused with the daily short sale volume that FINRA also publishes. This page covers what the count includes, the reporting calendar and the lag it creates, the three ways the number is usually expressed, why it can exceed 100% of the shares, how it differs from short volume, and where Kresmion shows it. It is descriptive throughout.

What short interest counts

FINRA Rule 4560 requires each FINRA member firm to keep a record of the total short positions in all customer and proprietary accounts, in equity securities other than restricted ones, and to report them to FINRA. The rule asks for gross short positions in each account, mostly from short sales, and it counts only positions from sales that have settled or reached settlement date by the close of the designated settlement date. FINRA describes the result as "a snapshot of the total open short positions existing on the books and records of brokerage firms" on a given settlement date, and it covers both exchange-listed and over-the-counter stocks.

Three things follow from that wording. It is a position, not a trade count: a share sold short in the morning and bought back in the afternoon never appears in it. It is gross, account by account, so a short held as a hedge against another position counts the same as one held as a view on the company. And it records how many shares are short, not who holds the positions or why.

The mechanics behind each position, borrowing shares, selling them and later buying them back to return, are covered in what short selling is. When a rising price pushes short sellers to buy shares back to cap their losses, and that buying adds to the rise, the result is a short squeeze.

The reporting calendar and the lag it creates

FINRA collects short interest twice a month. The mid-month report uses positions held on the settlement date of the 15th, moved to the previous business day on which transactions settled when the 15th is not a settlement date. The end-of-month report uses positions held on the last business day of the month on which transactions settle.

Firms must report by 6 p.m. Eastern Time on the second business day after the settlement date, and FINRA says the data is compiled and provided for publication on the seventh business day after it. A short interest figure is therefore roughly a week and a half old on the day it appears, and it can be close to a month old by the time the next one replaces it. A position opened and closed between two settlement dates never shows up at all.

Three ways the number is expressed

The raw figure is a share count, which means little on its own: five million shares short is a large position in a company with 20 million shares and a small one in a company with five billion. So it is usually turned into one of three ratios.

• Percent of shares outstanding divides the short position by every share the company has issued and not bought back.
• Percent of float divides it by the shares available to trade, which excludes blocks held by insiders and other affiliates. The float is never larger than shares outstanding, so this percentage is never the smaller of the two.
• Days to cover divides the short position by the stock's average daily trading volume. It reads as how many days of normal volume it would take to buy back every short share, if all of that volume went to covering. FINRA publishes the short position, the average daily volume and a days to cover figure side by side.

The SEC staff report on early 2021 trading gives a sense of ordinary levels: short interest as a share of shares outstanding is often less than 2.5% for large non-financial stocks and still tends to be less than 13% for small ones. Few stocks, if any, have short interest above 50% on a given date.

Why short interest can exceed 100%

A short position can sit on top of shares that were themselves bought from a short seller. The SEC staff report spells it out: if someone buys a share from a short seller and then lends it out again, the same share has been sold short twice for the purpose of the count. Repeat that enough times and short interest can pass 100% of the shares.

GameStop is the example the report uses. Its short interest hovered around 100% of shares outstanding from 2019 to early 2021, reaching 109.26% on 31 December 2020, and the report puts short interest as a percent of float at 122.97% in January 2021. The two figures use different denominators and different dates, which is why a short interest percentage always needs its denominator, and its date, named.

Short interest is not short volume

FINRA publishes a second short-selling dataset, and its own investor page warns that some websites relabel it as short interest, which is incorrect. The daily short volume file adds up the off-exchange trades executed as short sales on one day. Short interest counts the open positions on two days a month.

FINRA's example shows the gap. An investor who sells short and buys back on the same day appears in the daily short volume file and never in short interest. An investor who holds a short position for weeks appears in the short volume file once, on the day of the sale if it was executed off-exchange, and in every short interest report until the position is closed. Part of daily short volume comes from market makers filling buy orders without inventory and buying the shares back within the day, which is one reason a stock can print heavy short volume all week while its short interest barely moves.

Where Kresmion shows short interest

Kresmion's short interest page, part of the app and open with a free account, ranks FINRA's consolidated short interest for each settlement. For every name it shows the short position, the change against the prior settlement, days to cover and the settlement date, and on the latest settlement a percent of float where a float can be derived; the page also states how old the latest settlement is. By default it opens on names above $300 million in market value and a $5 share price, with one click to see the rest and a count of what the filter left out. Its source line reads "Source: FINRA. Short interest data owned by FINRA."

The float is the part FINRA does not supply. Kresmion builds it from SEC data: shares outstanding from the company's XBRL filings, less the holdings of insiders who report under Section 16 of the Exchange Act (the people who file Form 4) and less affiliate blocks reported on Schedules 13D and 13G. Every input it cannot resolve is left in the float rather than guessed out, so the published percent of float is a lower bound, and it is left blank, not shown as zero, where an input is missing. The same short interest data is available in Kresmion's spreadsheet, also with a free account, through the =SHORTINTEREST function.

What short interest cannot tell you

• It is late. Each figure describes positions on a settlement date about a week and a half before publication. Anything that happened since is not in it.
• It is a twice-monthly snapshot. Positions opened and closed between settlement dates are invisible, and a change between two reports does not say when within the period it happened.
• It does not say why. Hedges against convertible bonds, options or index positions count the same as positions taken on a view of the company, and the data does not separate them.
• Days to cover depends on a volume that changes. It uses an average of past volume, and when average volume is zero the ratio has no meaning. In FINRA's data file, a ratio past 999.99 and a ratio with no volume behind it can both appear as 999.99, so that value needs the average volume read beside it.
• Percent of float depends on the float estimate. Different data providers subtract different holders, so two sites can show different percentages for the same short position. Kresmion publishes its percent of float as a lower bound for that reason, and leaves it blank where shares outstanding cannot be matched to the class of stock that trades.

Key takeaways

Frequently asked questions

How often is short interest reported?

Twice a month. Firms report positions held on a mid-month settlement date and on the last settlement day of the month, and FINRA publishes the compiled data on the seventh business day after each settlement date.

How do you compare short interest between two stocks?

By putting both on the same denominator and the same settlement date, usually percent of shares outstanding or percent of float. A raw share count says nothing until it is divided by the company's size, and a single reading is easier to interpret against the same stock's own history and against similar companies than against a fixed threshold.

Does high short interest mean a stock will fall?

No. Short interest records how many shares are sold short on a past date. It says nothing about where the price goes, and part of it can be hedging that carries no view on the company at all.

What is the difference between short interest and short volume?

Short interest is the number of shares held short at the end of a settlement date, reported twice a month. Short volume is the number of shares traded as short sales during one day in off-exchange trading. A short sale opened and closed within the day is in short volume and never in short interest.

What does days to cover mean?

It is the short position divided by the stock's average daily volume: the number of days of normal trading it would take to buy back all the short shares if that volume went entirely to covering. It is a rough gauge of how crowded a position is relative to the market for the stock, not a prediction of how long covering would take.

This page is information, not investment advice.

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Source: FINRA Rule 4560, Short-Interest Reporting, https://www.finra.org/rules-guidance/rulebooks/finra-rules/4560 ; FINRA, About Equity Short Interest (reporting deadlines and publication schedule), https://www.finra.org/finra-data/browse-catalog/equity-short-interest ; FINRA, Short Interest: What It Is, What It Is Not (25 January 2023), https://www.finra.org/investors/insights/short-interest ; U.S. Securities and Exchange Commission, Staff Report on Equity and Options Market Structure Conditions in Early 2021 (14 October 2021), sections 3.2 and 3.4, footnotes 61 and 75, https://www.sec.gov/files/staff-report-equity-options-market-struction-conditions-early-2021.pdf ; Kresmion short interest page, methodology and default filters. Source: FINRA. Short interest data owned by FINRA.

Kresmion Research.