Short Float %

[MistakesWereMade]

What does this number mean? is it the % of shares that can be shorted?

So lets say for example... Wmt has 2.30% short float. Does this mean only 2.30% can be shorted out of 1.57 billion shares available?

 

[ACstudio]

What does this number mean? is it the % of shares that can be shorted?

So lets say for example... Wmt has 2.30% short float. Does this mean only 2.30% can be shorted out of 1.57 billion shares available?

It means 2.30% of the available shares are shorted.

 

[MistakesWereMade]

Ahh ok...

 

[CostaKapo]

It means 2.30% of the available shares are shorted.

Follow up question because I am sure it is valuable to others as well - How can you use the percentage of short float as an indicator/information in regards to trading?

 

[ACstudio]

Follow up question because I am sure it is valuable to others as well - How can you use the percentage of short float as an indicator/information in regards to trading?

It becomes important when you consider "days to cover". Just multiply the outstanding shares by the short float then divide that number by avg daily volume. That will give you an idea of how many days it would take short positions to cover at the given daily volume.

So if you end up with something like a 30% short float that would take 15 days to cover at current volume you have a situation ripe for a short squeeze. As if a binary event occurred that would create an above avg # of buyers pushing the price higher the shorts would be pressed into covering at higher prices pushing the price even higher.

The same thing can happen on the way down in a long squeeze but it's just not as notable as downside velocity is much more common.