Die Shorties haben echt massive Probleme,bei dem vorhandenen täglichen Volumen bei DEWM.
I've heard the term 'days to cover' thrown around quite a bit. Does 'days to cover' have anything to do with short interest?
Yes, it does! Days to cover is a function of how many shares of a particular company have been sold short. It is calculated by dividing the number of shares sold short by the average daily trading volume.
Look at Ichabod's Noggins (Nasdaq:HEAD). One million shares of this issue have been sold short (we can find this number, called the short interest, in such publications as Barrons and the IBD). It has an average trading volume of 25,000. The days to cover is 1,000,000/25,000, or 40 days.
When you short a stock, you want the days to cover to be low, say around 7 days or so. This will make the shares less subject to a short squeeze, the nightmare of shorters in which someone starts buying up the shares and driving up the share price. This induces shorters to buy back their shares, which also drives up the price! A short days to cover means the short interest can be eliminated quickly, preventing a short squeeze from working very well.
Also, a lengthy days to cover means that many people have already sold short the stock, making a further decline less likely. |
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