Short interest is best described as what?

• A. The total number of shares outstanding.
• B. The number of shares sold short that must be repurchased; high levels can be bullish.
• C. The percentage of days the stock price rose.
• D. The volume traded on the first day after earnings.

Answer: (B)

Short interest refers to shares that have been sold short but not yet covered, meaning it’s the amount of stock that would need to be bought back to close those short positions. This reflects the number of shares that must be repurchased and can signal squeeze pressure: if the stock moves higher, short sellers may rush to cover, potentially driving the price up. High short interest can thus be bullish in practice because it raises the risk of a short squeeze, where a rapid covering rally pushes prices higher. Short interest can be shown as a raw share count or as a percentage of the float, and is sometimes paired with the days-to-cover metric to gauge how quickly the shorts could be forced to cover. It isn’t the total shares outstanding, it isn’t the percentage of days the price rose, and it isn’t the volume on the first day after earnings.