Days to Cover

Days to cover, also called the short interest ratio, is calculated by dividing short interest by the average number of shares traded each day.

For example, if 6,000,000 shares of a company are sold short and its average daily trading volume is 1,500,000 shares, days to cover is 4. It would take about four days of normal trading for all short sellers to close their positions.

A high days-to-cover figure suggests that short sellers could struggle to exit quickly. If good news pushes the price up, they may all try to buy at once, which can drive the price sharply higher in a short squeeze.

Days to cover depends on trading volume, which can change quickly. A share with modest short interest but very low trading volume may have a high days-to-cover figure. Investors use it alongside short interest as a measure of how crowded a short position is and how vulnerable it might be to a squeeze.