Tag: short squeeze

Looking for Short Squeeze Plays?

by Fred Fuld III

In case you haven’t noticed, the stock market has tanked recently, with most stocks dropping by a substantial amount. Some traders think we are due for a bounce, even if we are in a bear market (which I think we are).

If we are do for a bounce, what do you do?

Traders and investors can make money on the long side from short squeezes. One technique that stock traders utilize is buying short squeeze stocks, companies have been heavily shorted. Here is a more extensive explanation of  short squeezes.

When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short sellers can be profitable, but sometimes when the stock moves against them, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

So what stocks are heavily shorted that may be worth a closer examination? Check out the following list, but be aware, that often some stocks are heavily shorted for a reason.

All these stocks have more than 30% of their float shorted, have days-to-cover greater than 6, and all are generating earnings with trailing and/or forward price to earnings ratios less than 15.

Company Symbol Short % of Float Days to Cover
Big 5 BGFV 38% 9
Big Lots BIG 34% 5.8
Conn’s CONN 42% 8.5
Camping World CWH 35% 9.1
Groupon GRPN 33% 6.2

Just keep in mind that just because a stock has good earnings ratios and are heavily shorted, doesn’t mean that the stock won’t continue to drop, especially in a bear market. Also, stocks that are significantly shorted may be shorted for a reason.

Disclosure: Author didn’t own any of the above at the time the article was written.

10 Ways to Make Money in a Bear market

by Fred Fuld III

Although the stock market has been rising for the last several days, some investors and traders believe that this rise is only temporary, and that we are in the beginning of a bear market. If you want to profit from downward markets and falling prices, there are many ways to do so.

Several techniques are available to make money in a bear market, some of which are speculative, and some not that risky. Even if you have a small account, there are ways to protect yourself, and even make money on the downside. Here are some of those strategies.

1. Sell a Vertical Call Option Spread

This strategy is a little complicated, but I listed it first, because it is one of the least risky, since your losses are limited, unlike most of the other strategies listed here. Also, I listed it at the beginning, because I use this trading technique all the time.

If you are familiar with options, then selling a vertical call spread is a great way to make money when a stock drops while protecting yourself if the stock goes up. (This happens to be my favorite strategy.)

This involves shorting an out of the money call option and buying a further out of the money call option at the same time. If the stock drops or stays the same, you make money from the short call which exceeds the loss on the long call. If the stock goes up to the strike price of the short call, you still make a profit. It is only when the stock rises above the strike price of the short call that you begin losing money.

To make it simple, here is an example:

Stock is at 50

Sell (short)  one call with a strike price of 51 for 3 (an option that is trading at 3 means $300)

Buy one call with a strike price of 52 for 1 ($100)

If the stock drops to 45, the 51 call drops to $0 and you make $300 because you shorted it, and the 52 call drops to $0 losing $100 because you own or were long it, netting you a profit of $200.

If the stock rises from 50 to 100, you lose $4900 on the 51 call that you shorted, but you make $4800 on the one that you bought, so you only lose $100.

Generally, you want to use options that expire in 40 to 60 days, and close out your position in 15 to 25 days.

Disadvantages of the selling a vertical call spread
  • Your profit is limited
  • You need approval from your broker to do option spreads
  • Both legs of the spread need to be placed simultaneously (easy to do with most trading platforms)
  • May need to wait 25 or 30 days to see a profit

2. Shorting Stocks

This is one of the most speculative ways of making money in a bear market. In simple terms, you make money when the stock goes down and you lose money when the stock goes up. What technically happens is that you borrow the shares and immediately sell them (this all is done electronically through your brokerage firm) and since you owe those shares, you eventually have to buy them back at some price, hopefully a lower price, in order to return those shares. The difference between your sale price and eventual purchase price is your profit (or loss, if you buy back at a higher price).

Can you make a lot of money shorting stocks in a bear market? Yes. Is it speculative? Very. Can you lose a lot? Most definitely. This is why it is so risky. When you short a stock, the lowest point it can drop to is zero. Whereas, if the stock goes up, the amount it can rise is unlimited. Let’s say you short 100 shares of a stock at $20 a share. If you put up funds equal to 100% of the value of the shorted amount, and the stock drops to zero, you’ve made a 100% return. However, suppose the stock goes from 20 to 100, you end up losing 400% of your money with lots of margin calls along the way. This is called a short squeeze. But even on a short term basis, an investor can lose money very fast.

Unfortunately for those who do their trading in retirement accounts, such as IRAs, shorting stocks is not allowed.

So in summery, do I think you should short stocks? Absolutely not, unless you are a professional trader. The risk is almost infinite. If you understand options real well, hedged short selling might be OK (see the next strategy), as long as you are an advanced trader, and know what you’re doing.

3. Hedged Short Selling

Hedged short selling is a strategy whereby you short a stock and at the same time, you buy a close-to-the-money call option. That way, if the stock shoots up, you are protected with the call option. If the stock drops, you will lose what you paid for the option, but you will make money on your short stock position.

Example: you short 100 shares of a stock that is currently trading at 50 (so you short $5000 in stock), and you buy a call option with a strike price of 52 for 1 ($100).

The stock goes to 40. You make $1000 from the stock dropping from 50 to 40, and you lose the $100 you paid for the call option, with a net profit of $900.

The stock stays the same at 50. You don’t make any money on the short sale fo the stock and you lose $100 on the call option for a net loss of $100.

The stock goes up to 60. You lose $1000 on the short stock, but the value of the call option will increase from 1 to 10 ($100 to $1000), netting $900 on the difference, for an overall loss of $100.

In other words, in the example above, you can only lose $100, if the stock stays the same or goes up, but if the stock drops, the profit can be substantial.

Actually, to be more accurate, if the stock goes to 51 and stays there, you will lose $100 on the short stock sale and $100 on the call option, for a total maximum loss of $200. Even still, it may be worth the small loss in case you are wrong about a bear market.

Disadvantages of the hedged short selling
  • You need approval from your broker to short stock and buy options
  • Both positions should be placed simultaneously (easy to do with most trading platforms)

4. Short (Bearish) ETFs

The Exchange Traded Fund known as the Bearish ETF or Short ETF is another option. What these ETFs do is provide a return opposite to the return of the index, sector, or industry that it is tracking.

For example, the Short Dow30 ProShares (DOG) provides a return that is the inverse of the Dow Jones Industrial Average. If the Dow goes down 2%, the DOG is expected to up 2%. The Short QQQ ProShares (PSQ) ETF gives a return that is the inverse of the NASDAQ 100 Index.

The nice thing about these short ETFs is that your losses are limited. Also, if you are long individual stocks that you don’t want to sell, these can be good for protecting your overall portfolio on the downside.

5. Leveraged Bearish ETFs

If you like volatility, you will love the leveraged bearish ETFs. What these ETFs do is provide double, and in some cases triple the inverse return of indices.Some examples include the UltraShort Consumer Services ProShares (SCC) and the ProShares UltraShort S&P S&P 500 (SDS).

In addition there are several triple leveraged bearish ETFs. Direxion Daily MCSI Real Estate Bear 3X Shares (DRV), Direxion Daily Energy Bear 2X Shares (ERY), and ProShares UltraPro Short Russell 2000 (SRTY) are just a few of the many leveraged bearish ETFs.

The volatility of these ETFs is substantial, and so are the wide bid and asked spreads that I’ve seen occasionally.

The advantage of these trading vehicles is that they are a way of shorting on margin, with a limit on the downside. The disadvantage is that the losses can be quick and large, especially with the triple leverage short ETFs.

6. Bear Funds

It may be hard to believe, but there are actually a large number of bearish mutual funds for the long term bearish investors. These include the Grizzly Short Fund (GRZZX), the PIMCO StocksPlus TR Short Strategy Institutional Fund (PSTIX), and the ProFunds Bear Investors Fund (BRPIX). These funds have minimum investments ranging from $1,000 to $5,000,000.

7. Puts

First, a little about option pricing.  Puts and calls are priced on a per share basis, so a put at $1 would cost $100 for a 100 share option, or a call at $3.50 would cost $350.

A put is the option to put your stock to someone at a particular price within a certain period of time. In other words, if you own a stock that is trading at 22 and you buy a put at a dollar which gives you the right to put your stock to someone at $20 per share within three months, there are a couple of things that could happen. The stock could tank to $14 a share and you could put your stock at 20, or just resell the put for 6 (the difference between 14 and 20) and collecting the profit. You would be far better off than just doing nothing. And if the stock goes up or stays about the same, you are just out your $100 for the option. Puts can be useful for experienced traders.

8. Cash

There is one other way to make money in a bear market. Sell everything, and keep your money in cash, with the safest way being a T-bill money market fund, that only owns T-bills. (Money market funds that invest in repos are supposed to be just as safe, but I consider them slightly more risky than T-bills.) The advantages are that you can’t lose money and you can receive an income from the investment.

The alternative cash investment is putting your money in a bank certificate of deposit or savings account. Your money is safe up to the FDIC limits, but the interest rate will be very low.

9. Anti ETFs

The Anti-ETF is a new investment vehicle that has cropped up recently. The goal of these ETFs is to provide the reverse return of another popular actively managed exchange traded fund, as opposed to the bearish ETF which attempt to track the inverse of an index, like the ProShares Short S&P500 ETF (SH).

The most popular is the Tuttle Capital Short Innovation ETF (SARK), which has a goal of achieving the inverse of the return of the popular ARK Innovation ETF (ARKK) managed by Cathie Wood.

10. Series I Bonds

If you think the bear market will last for a year or more, Series I bonds are the way to go. These bonds never drop in value and currently pay 9.62%. Plus, they are backed by the U.S. Government. For more information on these bonds, check out the article Series I Bonds Now Paying over 9%.

There are obviously additional risks involved with shorting stock and options, which you need to delve into with your broker before utilizing those strategies. If we are in a bear market, hopefully you can protect your portfolio and make some money on the downside.

Author does not own any of the above mentioned securities.

Top Software Stocks Short Squeeze Plays

by Fred Fuld III

Many software stocks have made all time highs in the last couple months, but others have been sinking. Several of these software companies are heavily shorted.  When stocks rise quickly in price for whatever reason, short sellers scramble to cover their positions by buying shares, and causing the price of the stock to increase even more.

Traders and investors can make money on the long side from short squeezes. One technique that stock traders utilize is buying short squeeze stocks, companies have been heavily shorted. Here is a more extensive explanation of  short squeezes.

When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short sellers can be profitable, but sometimes when the stock moves against them, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

So what stocks are heavily shorted that may be worth a closer examination? Check out the following list, but be aware, that often some stocks are heavily shorted for a reason.

All these stocks have significant short metrics.

Stock Symbol % of Float Days to Cover
Asana, Inc. ASAN 24.0% 3.23
Cazoo Group Ltd CZOO 28.5% 12.41
MicroStrategy Incorporated MSTR 23.8% 4.23
PAR Technology Corporation PAR 21.5% 12.95
Porch Group, Inc. PRCH 22.1% 8.42
Clear Secure, Inc. YOU 23.9% 7.83

Here is one example from the list above. PAR Technology (PAR) is a stock that is heavily shorted. As a matter fo fact, over 21% of the float is shorted. Plus, the short interest ratio is 12.95. That means it would take the short sellers over twelve days to cover their positions, based on the number of shares that trade each day on average.

Maybe a short squeeze will cause a few of these to rise sharply, turning lemons into lemonade.

Disclosure: Author didn’t own any of the above at the time the article was written.

Top Travel Stocks Short Squeeze Plays

by Fred Fuld III

Many stocks in the travel industry have suffered during the last three years due to the COVID pandemic. Some have lost over 50% of their value since 2019. As the market prices for these stocks have dropped so much, now might be the time to look for short squeeze opportunities.

Here is a quick review about the short squeeze and its terminology. When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short selling can be profitable, but sometimes when the stock moves against the short sellers, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

Check out the following list, but be aware, that often some stocks are heavily shorted for a reason. All these stocks have significant short metrics, but they have very low market caps and floats.

Company Symbol Days to Cover % of Float Shorted
Carnival Corporation & plc CCL 2 10%
Expedia Group, Inc. EXPE 2.9 5%
Lindblad Expeditions Holdings, Inc. LIND 23.9 19%
Norwegian Cruise Line Holdings Ltd. NCLH 1.6 10%
Royal Caribbean Cruises Ltd. RCL 2.9 6%
TripAdvisor, Inc. TRIP 4 12%

So as an example, Carnival has 10% of the float shorted, and it will take two days for the short sellers to cover their positions, based on the average daily volume.

Obviously, there is no guarantee that these stocks will go up, but if I was short any stock, I wouldn’t want to waste any time covering my position if the stock started to move up sharply, before all the other short sellers clamor in and drive the price way up.

Disclosure: Author has a short and long option position in CCL.

Top Short Squeeze Plays

by Fred Fuld III

The stock market has been suffering during the last several days. As I write this, the Dow Jones Industrial  Average is down 528, and the SPY is down 5.85. Since the market has dropped so much, now might be the time to look for short squeeze opportunities.

Here is a quick review about the short squeeze and its terminology. When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short selling can be profitable, but sometimes when the stock moves against the short sellers, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

Check out the following list, but be aware, that often some stocks are heavily shorted for a reason. All these stocks have significant short metrics, but they have very low market caps and floats.

Company Symbol Short Interest Days to Cover Float
Cortexyme Inc CRTX 59% 4.7 15.54M
Intercept Pharmaceuticals ICPT 35% 10.5 23.58M
Blink Charging Co BLNK 34% 3.9 36.46M
Beyond Meat Inc BYND 34% 6.2 56.16M
iSpecimen Inc ISPC 33% 0.2 3.27M
Gogo Inc GOGO 32% 6.9 45.67M

So as an example, Cortexyme has 59% of the float shorted, and it will take almost five days for the short sellers to cover their positions, based on the average daily volume.

Obviously, there is no guarantee that these stocks will go up, but if I was short any stock, I wouldn’t want to waste any time covering my position if the stock started to move up sharply, before all the other short sellers clamor in and drive the price way up.

Disclosure: Author didn’t own any of the above at the time the article was written

Heavily Shorted Debt Free Stocks

by Fred Fuld III

Many of the meme stocks, such as GameStop (GME) and AMC (AMC), have shot up in price several times because of the fact that they have been heavily shorted and subject to a short squeeze.

So if you are looking for other heavily shorted stocks, you might want to check out the stocks which have a large portion of their float shorted, and in addition, have low or no debt. If a company has no debt, it is hard for them to go out of business.

Here is a review of the short squeeze and its terminology. When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short selling can be profitable, but sometimes when the stock moves against the short sellers, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

Check out the following list, but be aware, that often some stocks are heavily shorted for a reason. All these stocks have significant short metrics.

Big 5 Sporting Goods (BGFV) has over 45% of its float shorted and no long term debt. The percentage shorted has increased by 15% over last month. In addition, the stock has a short interest ratio, also known as a Days to Cover Ratio, of 5.9. This means that it would take almost six days for short sellers to cover their position, based on recent volume. The stock trades at 5.5 times trailing earnings. It is a sporting goods retailer in the western United States.

OppFi Inc. (OPFI) has 12.3$ of its float shorted. The short entered has had a one month increase of 6% and a short interest ratio of 4.4. The company operates a financial technology platform.

Sunlight Financial Holdings (SUNL) is another debt free company that has over 10% of of its float shorted. The percentage shorted has increased by 9% over last month. Plus, the stock has a short interest ratio of 6.0. The company provides a financing platform for solar installation.

Happy squeezing!

20 Stocks With More Than 30% of Float Shorted: Short Squeeze Plays

by Fred Fuld III

Are you looking for some short squeeze plays? Are you looking for stocks that have over 30% of their float shorted?

Here is a list of 20 stocks that fit this criteria.

Altimeter Growth Corp. AGC
Beam Global BEEM
BEST Inc. BEST
Big 5 Sporting Goods Corporation BGFV
Blink Charging Co. BLNK
Esperion Therapeutics, Inc. ESPR
Arcimoto, Inc. FUV
Canoo Inc. GOEV
Intercept Pharmaceuticals, Inc. ICPT
Kaixin Auto Holdings KXIN
Nikola Corporation NKLA
NeuroPace, Inc. NPCE
PubMatic, Inc. PUBM
Lordstown Motors Corp. RIDE
Reneo Pharmaceuticals, Inc. RPHM
SmileDirectClub, Inc. SDC
Support.com, Inc. SPRT
Tattooed Chef, Inc. TTCF
View, Inc. VIEW
VPC Impact Acquisition Holdings VIH

 

Disclosure: Author didn’t own any of the above at the time the article was written.

Stocks with the Highest Short Interest: Short Squeeze Plays

by Fred Fuld III

As I write this, the Dow Jones Industrial  Average is down 477, and the S&P is also down. Maybe while the market has dropped so much, now might be the time to look for short squeeze opportunities.

Here is a review about the short squeeze and its terminology. When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short selling can be profitable, but sometimes when the stock moves against the short sellers, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

Check out the following list, but be aware, that often some stocks are heavily shorted for a reason. All these stocks have significant short metrics.

Stock Symbol % Float Shorted Days to Cover Stock Price
Workhorse WKHS 35% 2.2 8.97
Arcimoto FUV 34% 5.4 10.94
Blink BLNK 34% 6.2 30.09
Support.com SPRT 33% 1.5 8.31

So as an example, Arcimoto has 34% of the float shorted, and it will takeover five days for the short sellers to cover their positions, based on the average daily volume.

Obviously, there is no guarantee that these stocks will go up, but if I was short any stock, I wouldn’t want to waste any time covering my position if the stock started to move up sharply, before all the other short sellers clamor in and drive the price way up.

Disclosure: Author didn’t own any of the above at the time the article was written

Top Short Interest Analyzers

by Fred Fuld III

NASDAQ has a service on their site which allows you to check on the short interest on any NASDAQ stock for any month.

For example, if you enter Sundial (SNDL) [short interest is measured on the 15th of every month], you come up with the fact that the short interest is 267,716,798 shares, an increase of 4.47% from the prior month, with an average daily share volume of 208,079,855 and 1.29 days to cover.

For NYSE stocks, such as GameStop (GME) and AMC (AMC), check out Shortsqueeze.com. It will give you the following:
Short Interest Ratio (Days To Cover)
Short Percent of Float
Short % Increase / Decrease
Short Interest (Current Shares Short)
Shares Float
Short Interest (Prior Shares Short)

There is also a website called Shortinterest.com which shows the top shorted stocks.

Disclosure: Author owns SNDL.

Top Short Squeeze Stocks

by Fred Fuld III

Remember when GameStop (GME) went up over 700% in five days due to a short squeeze? The movie theater chain, AMC (AMC) increased by over 1,000% in ten days from a short squeeze.

Here is a review about the short squeeze and its terminology. When you short a stock, it means that your goal is to make money from a drop in the price of a stock. Technically, what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. This all happens electronically, so you don’t actually see all the borrowing and returning of shares; it just shows up on your screen as a negative number of shares.

Short selling can be profitable, but sometimes when the stock moves against the short sellers, and begins to rise, the short sellers jump in right away to buy shares to cover their positions, creating what is called a short squeeze. When a short squeeze takes place, it can cause the share prices to increase fast and furiously. Any good news can trigger the short squeeze.

Some traders utilize this situation by looking for stocks to buy that may have a potential short squeeze. Here is what a short squeeze trader should take into consideration:

Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high and potential short squeeze plays.

Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.

Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

Check out the following list, but be aware, that often some stocks are heavily shorted for a reason. All these stocks have significant short metrics.

Stock Symbol % Float Shorted Days to Cover Stock Price
PubMatic Inc. PUBM 45.53% 4.3 36.43
Esperion Therapeutics ESPR 41.16% 14 22.32
Ontrak Inc. OTRK 39.69% 3.3 31.71
Blink Charging Co. BLNK 37.78% 2 30.94

So as an example, Esperion has over 41% of the float shorted, and it will take 14 days for the short sellers to cover their positions, based on the average daily volume.

Obviously, there is no guarantee that these stocks will go up, but if I was short any stock, I wouldn’t want to waste any time covering my position if the stock started to move up sharply, before all the other short sellers clamor in and drive the price way up.

Disclosure: Author didn’t own any of the above at the time the article was written.