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Posted On: 02/10/2021 3:34:36 PM
Post# of 154036
Re: Shelly2626 #77199
The days to cover is short interest divided by average daily trading volume. If all the average volume were shorts covering, it would take them 5.23 days to cover their short position.
This is from Investopedia:
'Days to cover' can be useful to traders in the following ways:
It can be a proxy for how bearish or bullish traders are about that company which can aid future investment decisions. A high 'days to cover' ratio might be a harbinger that all is not well with company performance.
It gives investors an idea of potential future buying pressure. In the event of a rally in the stock, short sellers must buy back shares on the open market to close out their positions. Understandably, they will seek to purchase the shares back for the lowest price possible, and this urgency to get out of their positions could translate into sharp moves higher. The longer the buyback process takes, as referenced by the 'days to cover' metric, the longer the price rally may continue based solely on the need of short sellers to close their positions.
Additionally, a high 'days to cover' ratio can often signal a potential short squeeze. This information can benefit a trader looking to make a quick profit by buying that company's shares ahead of the anticipated event actually coming to fruition.
This is from Investopedia:
'Days to cover' can be useful to traders in the following ways:
It can be a proxy for how bearish or bullish traders are about that company which can aid future investment decisions. A high 'days to cover' ratio might be a harbinger that all is not well with company performance.
It gives investors an idea of potential future buying pressure. In the event of a rally in the stock, short sellers must buy back shares on the open market to close out their positions. Understandably, they will seek to purchase the shares back for the lowest price possible, and this urgency to get out of their positions could translate into sharp moves higher. The longer the buyback process takes, as referenced by the 'days to cover' metric, the longer the price rally may continue based solely on the need of short sellers to close their positions.
Additionally, a high 'days to cover' ratio can often signal a potential short squeeze. This information can benefit a trader looking to make a quick profit by buying that company's shares ahead of the anticipated event actually coming to fruition.
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