Trading the US market
Days to cover (short interest ratio)
Definition
Short interest ÷ average daily trading volume: how many days of average volume it would take to buy back every shorted share. FINRA rounds it to hundredths. 6 million ÷ 1 million a day = 6 days.
Example
Say a stock has 4.5 million shares sold short and trades an average of 1.4 million shares a day. Days to cover is 4.5 ÷ 1.4 = 3.21, rounded to hundredths. If average volume rose to 3 million shares a day, the same short interest would equal just 1.5 days, so the ratio can shrink without a single short being covered.
Hypothetical numbers, for illustration only.
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