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DOW   31,580.63 (+0.00%)
QQQ   298.28 (-0.23%)
AAPL   155.01 (-0.61%)
MSFT   257.35 (-0.29%)
META   160.47 (+0.05%)
GOOGL   108.72 (-0.67%)
AMZN   128.42 (-0.82%)
TSLA   285.24 (+0.54%)
NVDA   137.18 (+0.03%)
NIO   17.43 (-0.29%)
BABA   88.94 (-1.83%)
AMD   81.48 (+2.35%)
T   16.84 (-0.18%)
MU   54.46 (-0.98%)
CGC   3.41 (+0.00%)
F   15.17 (-1.69%)
GE   73.19 (-0.53%)
DIS   111.75 (-0.83%)
AMC   8.43 (+0.48%)
PYPL   95.19 (+0.23%)
PFE   46.37 (+0.52%)
NFLX   225.00 (-1.73%)
S&P 500   3,980.35 (+0.01%)
DOW   31,580.63 (+0.00%)
QQQ   298.28 (-0.23%)
AAPL   155.01 (-0.61%)
MSFT   257.35 (-0.29%)
META   160.47 (+0.05%)
GOOGL   108.72 (-0.67%)
AMZN   128.42 (-0.82%)
TSLA   285.24 (+0.54%)
NVDA   137.18 (+0.03%)
NIO   17.43 (-0.29%)
BABA   88.94 (-1.83%)
AMD   81.48 (+2.35%)
T   16.84 (-0.18%)
MU   54.46 (-0.98%)
CGC   3.41 (+0.00%)
F   15.17 (-1.69%)
GE   73.19 (-0.53%)
DIS   111.75 (-0.83%)
AMC   8.43 (+0.48%)
PYPL   95.19 (+0.23%)
PFE   46.37 (+0.52%)
NFLX   225.00 (-1.73%)
S&P 500   3,980.35 (+0.01%)
DOW   31,580.63 (+0.00%)
QQQ   298.28 (-0.23%)
AAPL   155.01 (-0.61%)
MSFT   257.35 (-0.29%)
META   160.47 (+0.05%)
GOOGL   108.72 (-0.67%)
AMZN   128.42 (-0.82%)
TSLA   285.24 (+0.54%)
NVDA   137.18 (+0.03%)
NIO   17.43 (-0.29%)
BABA   88.94 (-1.83%)
AMD   81.48 (+2.35%)
T   16.84 (-0.18%)
MU   54.46 (-0.98%)
CGC   3.41 (+0.00%)
F   15.17 (-1.69%)
GE   73.19 (-0.53%)
DIS   111.75 (-0.83%)
AMC   8.43 (+0.48%)
PYPL   95.19 (+0.23%)
PFE   46.37 (+0.52%)
NFLX   225.00 (-1.73%)
S&P 500   3,980.35 (+0.01%)
DOW   31,580.63 (+0.00%)
QQQ   298.28 (-0.23%)
AAPL   155.01 (-0.61%)
MSFT   257.35 (-0.29%)
META   160.47 (+0.05%)
GOOGL   108.72 (-0.67%)
AMZN   128.42 (-0.82%)
TSLA   285.24 (+0.54%)
NVDA   137.18 (+0.03%)
NIO   17.43 (-0.29%)
BABA   88.94 (-1.83%)
AMD   81.48 (+2.35%)
T   16.84 (-0.18%)
MU   54.46 (-0.98%)
CGC   3.41 (+0.00%)
F   15.17 (-1.69%)
GE   73.19 (-0.53%)
DIS   111.75 (-0.83%)
AMC   8.43 (+0.48%)
PYPL   95.19 (+0.23%)
PFE   46.37 (+0.52%)
NFLX   225.00 (-1.73%)

Highest Short Interest Stocks

Shares that are sold "short" are borrowed then sold with the hopes that the share price will drop before the shares that were borrowed have to be repurchased and returned. A large amount of short interest indicates that some investors believe a stock's price will decline in the near future. "Short" shares can also serve as a hedge for investors that have purchased a large number of shares of a company thinking that the share price will rise over time. This page lists stocks that currently have the highest levels of short interest. Learn more about short interest.

View publication schedule for short interest reports

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CompanyShares Sold Short (8/15/2022)Dollar Volume
Sold Short
Shares Sold Short (7/31/2022)Change from Previous ReportDays to Cover% of Float
% of Total
Shares Shorted
Occidental Petroleum Co. stock logo
Occidental Petroleum
64,130,000 shs $4.13 billion 61,470,000 shs+2,660,000 shs
2.46.9%6.9%Analyst Report
Analyst Revision
Charter Communications, Inc. stock logo
Charter Communications
8,200,000 shs $3.94 billion 7,980,000 shs+220,000 shs
6.87.4%4.3%Analyst Downgrade
Coinbase Global, Inc. stock logo
Coinbase Global
25,910,000 shs $2.38 billion 30,340,000 shs-4,430,000 shs
1.717.1%N/AAnalyst Report
Lucid Group, Inc. stock logo
Lucid Group
122,580,000 shs $2.30 billion 123,550,000 shs-970,000 shs
T. Rowe Price Group, Inc. stock logo
T. Rowe Price Group
16,810,000 shs $2.22 billion 16,830,000 shs-20,000 shs
Williams-Sonoma, Inc. stock logo
12,530,000 shs $2.02 billion 12,790,000 shs-260,000 shs
Plug Power Inc. stock logo
Plug Power
64,910,000 shs $1.94 billion 70,320,000 shs-5,410,000 shs
312.7%11.4%Analyst Revision
Chesapeake Energy Co. stock logo
Chesapeake Energy
19,930,000 shs $1.91 billion 19,210,000 shs+720,000 shs
7.919.8%N/AOptions Volume
Analyst Revision
Positive News
Gap Down
Chesapeake Energy Co. stock logo
Chesapeake Energy
19,930,000 shs $1.91 billion 19,210,000 shs+720,000 shs
7.919.8%N/AOptions Volume
Analyst Revision
Positive News
Gap Down
Unity Software Inc. stock logo
Unity Software
33,540,000 shs $1.82 billion 36,320,000 shs-2,780,000 shs
Rivian Automotive, Inc. stock logo
Rivian Automotive
46,690,000 shs $1.74 billion 47,890,000 shs-1,200,000 shs
Generac Holdings Inc. stock logo
6,340,000 shs $1.73 billion 5,560,000 shs+780,000 shs
Etsy, Inc. stock logo
14,370,000 shs $1.69 billion 13,830,000 shs+540,000 shs
3.511.5%11.3%Analyst Upgrade
Lumen Technologies, Inc. stock logo
Lumen Technologies
144,640,000 shs $1.60 billion 147,460,000 shs-2,820,000 shs
14.114.0%N/APositive News
Roblox Co. stock logo
32,480,000 shs $1.59 billion 34,370,000 shs-1,890,000 shs
Twitter, Inc. stock logo
35,120,000 shs $1.56 billion 34,020,000 shs+1,100,000 shs
DICK'S Sporting Goods, Inc. stock logo
DICK'S Sporting Goods
14,140,000 shs $1.52 billion 14,790,000 shs-650,000 shs
Live Nation Entertainment, Inc. stock logo
Live Nation Entertainment
15,330,000 shs $1.51 billion 14,660,000 shs+670,000 shs
Paramount Global stock logo
Paramount Global
54,540,000 shs $1.45 billion 54,810,000 shs-270,000 shs
Affirm Holdings, Inc. stock logo
37,160,000 shs $1.43 billion 39,730,000 shs-2,570,000 shs
2.419.1%N/AAnalyst Report
News Coverage
Wayfair Inc. stock logo
20,640,000 shs $1.41 billion 20,650,000 shs-10,000 shs
5.729.2%26.6%Gap Down
Pool Co. stock logo
3,520,000 shs $1.37 billion 3,260,000 shs+260,000 shs
Sirius XM Holdings Inc. stock logo
Sirius XM
196,560,000 shs $1.33 billion 206,530,000 shs-9,970,000 shs
CarMax, Inc. stock logo
12,860,000 shs $1.30 billion 12,650,000 shs+210,000 shs
Zoom Video Communications, Inc. stock logo
Zoom Video Communications
11,220,000 shs $1.27 billion 11,550,000 shs-330,000 shs
C.H. Robinson Worldwide, Inc. stock logo
C.H. Robinson Worldwide
10,320,000 shs $1.22 billion 10,050,000 shs+270,000 shs
8.58.4%7.9%Options Volume
Voya Financial, Inc. stock logo
Voya Financial
18,870,000 shs $1.21 billion 18,980,000 shs-110,000 shs
17.519.5%15.6%Analyst Report
Palantir Technologies Inc. stock logo
Palantir Technologies
116,940,000 shs $1.16 billion 113,590,000 shs+3,350,000 shs
Zscaler, Inc. stock logo
6,350,000 shs $1.15 billion 6,130,000 shs+220,000 shs
Zillow Group, Inc. stock logo
Zillow Group
29,290,000 shs $1.14 billion 28,290,000 shs+1,000,000 shs
7.418.4%16.3%Analyst Report
Options Volume
DoorDash, Inc. stock logo
14,670,000 shs $1.14 billion 17,170,000 shs-2,500,000 shs
Lennar Co. stock logo
12,810,000 shs $1.13 billion 12,280,000 shs+530,000 shs
Whirlpool Co. stock logo
6,560,000 shs $1.12 billion 7,070,000 shs-510,000 shs
American Airlines Group Inc. stock logo
American Airlines Group
72,810,000 shs $1.12 billion 80,570,000 shs-7,760,000 shs
BioMarin Pharmaceutical Inc. stock logo
BioMarin Pharmaceutical
11,340,000 shs $1.10 billion 11,360,000 shs-20,000 shs
Carnival Co. & plc stock logo
Carnival Co. &
102,220,000 shs $1.09 billion 102,520,000 shs-300,000 shs
1.910.6%10.5%Positive News
Chewy, Inc. stock logo
21,710,000 shs $1.07 billion 22,330,000 shs-620,000 shs
3.724.0%20.8%Analyst Report
Gap Down
Seagate Technology Holdings plc stock logo
Seagate Technology
12,170,000 shs $1.00 billion 12,110,000 shs+60,000 shs
6.45.9%5.3%Analyst Report
Analyst Revision
News Coverage
The Clorox Company stock logo
6,630,000 shs $986.74 million 7,310,000 shs-680,000 shs
HubSpot, Inc. stock logo
2,510,000 shs $975.24 million 2,560,000 shs-50,000 shs
3.65.5%5.4%Analyst Report
Akamai Technologies, Inc. stock logo
Akamai Technologies
10,030,000 shs $973.71 million 10,450,000 shs-420,000 shs
6.46.4%6.1%Analyst Downgrade
Iron Mountain Incorporated stock logo
Iron Mountain
17,170,000 shs $936.28 million 17,040,000 shs+130,000 shs
Best Buy Co., Inc. stock logo
Best Buy
11,340,000 shs $922.28 million 12,010,000 shs-670,000 shs
SoFi Technologies, Inc. stock logo
SoFi Technologies
118,910,000 shs $906.09 million 130,430,000 shs-11,520,000 shs
Mandiant, Inc. stock logo
39,290,000 shs $898.17 million 39,190,000 shs+100,000 shs
10.517.3%N/ANews Coverage
Royal Caribbean Cruises Ltd. stock logo
Royal Caribbean Cruises
20,630,000 shs $874.51 million 16,190,000 shs+4,440,000 shs
Upstart Holdings, Inc. stock logo
26,000,000 shs $860.08 million 25,840,000 shs+160,000 shs
337.5%33.8%News Coverage
CRISPR Therapeutics AG stock logo
CRISPR Therapeutics
10,720,000 shs $859.10 million 10,970,000 shs-250,000 shs
Wolfspeed, Inc. stock logo
9,530,000 shs $858.75 million 9,920,000 shs-390,000 shs
Wolfspeed, Inc. stock logo
9,530,000 shs $858.75 million 9,920,000 shs-390,000 shs
Beam Therapeutics Inc. stock logo
Beam Therapeutics
12,130,000 shs $852.86 million 12,970,000 shs-840,000 shs
9.222.1%19.4%News Coverage
Formula One Group stock logo
Formula One Group
12,390,000 shs $849.09 million 12,060,000 shs+330,000 shs
Antero Resources Co. stock logo
Antero Resources
21,630,000 shs $841.84 million 23,310,000 shs-1,680,000 shs
2.68.1%7.2%Analyst Revision
Advance Auto Parts, Inc. stock logo
Advance Auto Parts
4,050,000 shs $831.59 million 4,160,000 shs-110,000 shs
DraftKings Inc. stock logo
39,850,000 shs $828.88 million 39,320,000 shs+530,000 shs
1.910.5%9.9%Analyst Report
United States Steel Co. stock logo
United States Steel
32,170,000 shs $785.27 million 34,780,000 shs-2,610,000 shs
Floor & Decor Holdings, Inc. stock logo
Floor & Decor
8,110,000 shs $776.53 million 8,880,000 shs-770,000 shs
5.68.0%7.7%Gap Down
Thor Industries, Inc. stock logo
Thor Industries
8,190,000 shs $753.64 million 8,600,000 shs-410,000 shs
The Middleby Co. stock logo
4,740,000 shs $743.90 million 4,960,000 shs-220,000 shs
Biohaven Pharmaceutical Holding Company Ltd. stock logo
Biohaven Pharmaceutical
4,920,000 shs $728.16 million 5,130,000 shs-210,000 shs
6.17.9%7.6%Positive News
Lumentum Holdings Inc. stock logo
7,550,000 shs $726.23 million 7,650,000 shs-100,000 shs
9.911.3%9.9%Analyst Report
Repligen Co. stock logo
2,830,000 shs $723.72 million 3,230,000 shs-400,000 shs
5.35.5%5.2%Analyst Revision
News Coverage
Fate Therapeutics, Inc. stock logo
Fate Therapeutics
19,920,000 shs $718.32 million 21,100,000 shs-1,180,000 shs
Beyond Meat, Inc. stock logo
Beyond Meat
19,500,000 shs $696.15 million 19,950,000 shs-450,000 shs
ChargePoint Holdings, Inc. stock logo
37,280,000 shs $694.53 million 39,590,000 shs-2,310,000 shs
3.721.3%N/AAnalyst Report
Analyst Revision
First Horizon Co. stock logo
First Horizon
29,550,000 shs $685.56 million 32,330,000 shs-2,780,000 shs
AutoNation, Inc. stock logo
5,490,000 shs $678.12 million 5,750,000 shs-260,000 shs
NRG Energy, Inc. stock logo
NRG Energy
16,010,000 shs $676.42 million 15,130,000 shs+880,000 shs
Lyft, Inc. stock logo
34,900,000 shs $673.22 million 42,620,000 shs-7,720,000 shs
2.611.6%10.9%Analyst Report
Snap Inc. stock logo
53,780,000 shs $658.27 million 60,810,000 shs-7,030,000 shs
0.95.2%4.2%Analyst Report
Analyst Revision
Masimo Co. stock logo
4,100,000 shs $655.06 million 3,530,000 shs+570,000 shs
Las Vegas Sands Corp. stock logo
Las Vegas Sands
16,690,000 shs $645.74 million 17,560,000 shs-870,000 shs
2.65.1%2.2%Positive News
Avis Budget Group, Inc. stock logo
Avis Budget Group
3,370,000 shs $638.45 million 3,910,000 shs-540,000 shs
Watsco, Inc. stock logo
2,080,000 shs $635.02 million 1,960,000 shs+120,000 shs
7.56.3%6.3%Analyst Report
Analyst Revision
QuantumScape Co. stock logo
48,130,000 shs $634.35 million 49,820,000 shs-1,690,000 shs
MGM Resorts International stock logo
MGM Resorts International
17,460,000 shs $620.53 million 17,620,000 shs-160,000 shs
3.35.4%3.6%Analyst Downgrade
Gap Down
Five Below, Inc. stock logo
Five Below
4,480,000 shs $618.73 million 5,300,000 shs-820,000 shs
4.48.3%8.0%Analyst Report
Analyst Revision
Campbell Soup stock logo
Campbell Soup
12,100,000 shs $605.61 million 13,380,000 shs-1,280,000 shs
5.16.1%4.0%Earnings Report
Pure Storage, Inc. stock logo
Pure Storage
19,960,000 shs $604.39 million 19,570,000 shs+390,000 shs
5.87.2%7.0%Analyst Report
Oak Street Health, Inc. stock logo
Oak Street Health
20,900,000 shs $600.46 million 22,300,000 shs-1,400,000 shs
Credit Acceptance Co. stock logo
Credit Acceptance
1,030,000 shs $591.58 million 1,050,000 shs-20,000 shs
16.313.3%6.2%Positive News
Luminar Technologies, Inc. stock logo
Luminar Technologies
53,360,000 shs $590.16 million 50,200,000 shs+3,160,000 shs
Luminar Technologies, Inc. stock logo
Luminar Technologies
53,360,000 shs $590.16 million 50,200,000 shs+3,160,000 shs
Murphy USA Inc. stock logo
Murphy USA
2,010,000 shs $587.20 million 2,310,000 shs-300,000 shs
69.4%7.5%Positive News
NovoCure Limited stock logo
6,940,000 shs $585.18 million 6,780,000 shs+160,000 shs
11.36.8%6.7%News Coverage
World Wrestling Entertainment, Inc. stock logo
World Wrestling Entertainment
8,040,000 shs $580.25 million 8,290,000 shs-250,000 shs
10.518.9%17.8%Analyst Upgrade
Ormat Technologies, Inc. stock logo
Ormat Technologies
5,960,000 shs $579.01 million 5,550,000 shs+410,000 shs
7.912.2%10.6%Options Volume
Burlington Stores, Inc. stock logo
Burlington Stores
3,610,000 shs $577.60 million 4,230,000 shs-620,000 shs
Nordstrom, Inc. stock logo
23,150,000 shs $576.90 million 25,970,000 shs-2,820,000 shs
3.720.7%14.6%Analyst Revision
Knight-Swift Transportation Holdings Inc. stock logo
Knight-Swift Transportation
10,220,000 shs $576.82 million 9,390,000 shs+830,000 shs
Ceridian HCM Holding Inc. stock logo
Ceridian HCM
8,200,000 shs $575.23 million 9,070,000 shs-870,000 shs
The Carlyle Group Inc. stock logo
The Carlyle Group
16,090,000 shs $573.13 million 15,160,000 shs+930,000 shs
6.48.2%4.5%Analyst Downgrade
News Coverage
DISH Network Co. stock logo
DISH Network
28,190,000 shs $570.00 million 26,780,000 shs+1,410,000 shs
7.511.3%9.8%News Coverage
Omega Healthcare Investors, Inc. stock logo
Omega Healthcare Investors
16,940,000 shs $568.17 million 15,830,000 shs+1,110,000 shs
Bath & Body Works, Inc. stock logo
Bath & Body Works
14,460,000 shs $566.83 million 14,730,000 shs-270,000 shs
Karuna Therapeutics, Inc. stock logo
Karuna Therapeutics
2,060,000 shs $563.84 million 1,510,000 shs+550,000 shs
Trex Company, Inc. stock logo
9,700,000 shs $558.53 million 11,160,000 shs-1,460,000 shs
Sunnova Energy International Inc. stock logo
Sunnova Energy International
18,710,000 shs $557.18 million 18,250,000 shs+460,000 shs
Matador Resources stock logo
Matador Resources
9,230,000 shs $541.62 million 9,100,000 shs+130,000 shs
6.48.5%7.9%Analyst Revision
Mplx Lp stock logo
16,750,000 shs $538.51 million 15,660,000 shs+1,090,000 shs
Short Selling - Explanation For Shorting Stocks

How the MarketBeat short interest tracker can help investors find stocks

Short selling refers to the sale of security such as a stock, in anticipation of prices falling. The trading strategy is motivated by the belief that the prices of a security will drop, providing an opportunity for the stocks to be repurchased later and for the difference in price to be taken as profit.

Short sellers borrow shares of stocks they don’t own and try to sell them at the current price with the aim of rebuying them once the price drops significantly. The aim of this strategy is to benefit from the difference between the price of short selling and the cost of rebuying the stocks.

Unlike an investor who holds stocks for their value and the income they produce, traders capitalize on an anticipated decline in price by trying to sell high and buying low. Short selling is most of the time limited to margin accounts because of the unlimited losses that can come into being if stock prices start rising rather than dropping.

In this article, we’ll help investors understand the process of short selling and help them understand how to use the MarketBeat short interest tracker to identify stocks that may be good candidates for this strategy.

How to Understand the Process of Short Selling with Examples

Short selling is a three-step process with specific actions needed to be taken at each step:

  • First, a trader identifies a stock that they believe will trade lower and borrows a quantity of shares of the stock from a broker. Once that request is accepted, the trader sells the shares at the market price.
  • Second, if the stock price does fall below the sales price, the trader buys back the equal number of shares at the lower price.
  • Third, the trader sells those shares back to the broker at the price the trade initially paid.

The trader profits from the difference between the share price at the time of borrowing the shares and the share price at the time of returning the shares. Let’s look at an example of how this works:

  • Trader expects the stock of company XYZ, currently priced at $25, to fall in the future. He calls his broker and asks the broker to find him 100 shares of the company to borrow for a short sale. As soon as the broker lends the stocks, Mr. Trader sells them all for $25 each. Now Mr. Trader has $2500 but owes his broker 100 shares of XYZ.
  • If all goes as Mr. Trader hoped, and the share price drops to $20, he can cover his short position by buying back the stock. Mr. Trader now spends $2,000 to repurchase the shares and return them to the broker he borrowed them from. Once the transaction is complete, the profit on the trade will be $500.

Why Do Traders Engage in Short Selling?

Speculation is the main reason behind short selling, especially on companies that investors feel are overvalued. Companies can suffer from poor business plans, increased competition, and lousy management that may not be accurately reflected in its stock price.

Another reason traders engage in short selling is to hedge a long position in the same or similar stocks. A third reason is to participate in a short sale is as a way of seeking favorable tax treatment.  Whatever the reason short selling requires solid research, good intuition, and excellent timing if a trader is to profit from speculation.

With that said, short selling is one of the most misunderstood strategies in investing. Short sellers are generally reviled for trying to benefit from a bad situation. After all, a short seller could end up profiting from the woes of a company even while company stockholders’ and employees’ livelihoods are being destroyed.

However, that is not a complete and fair view of the job of a short seller. Optimism in the market can drive prices to lofty levels that are unsustainable and that don’t reflect the actual value of a company. The presence of short sellers in the marketplace can help to rebalance stock prices to ensure that companies are fairly valued.

Short selling also provides a form of defense against financial fraud by bringing to light companies that have tried to inflate their performance and valuation. If all stockholders could profit from a stock’s value rising, but no one could profit from the stock’s value falling, there would be very little pressure to keep the stock’s price in line with reality.

Why Short Interest is a Key Metric for Short Sellers

Short sellers track two key metrics when deploying short selling to generate returns from the stock market: short interest and short interest ratio. Traders can determine the percentage of a company’s shares that are being sold short, by first checking ‘short interest.

Short interest refers to the total number of shares sold as a percentage of a company’s total outstanding shares. If a stock has a short interest ratio of 10%, then it means that for every 10 outstanding shares, one is held as a short. Stocks with a high short interest ratio are usually at risk of “short squeeze,” a phenomenon that is most of the time associated with unexpected upward price spikes.

Hedge Funds are the most active when it comes to short selling stocks. Such funds try to hedge the market by short selling stocks they believe are overvalued. Sophisticated investors are also involved in short selling as they try to hedge market risk. Short selling is an ideal trading strategy for traders who think short term as it requires people to keep a close eye on trading positions.

What Are the Risks Involved With Short Selling?

While a necessary part of the market, short selling also has its fair share of risks.

  • For starters, when a large number of traders enter short positions, the collective actions could result in a dramatic impact that would drive prices to levels never seen before. It is for this reason that regulators at times ban short selling in a bid to protect stocks of companies under pressure.  During the financial crisis, investors were barred from short-selling stocks of banks and other financial institutions.
  • Short selling can also lead to unlimited lossesin the event that stock prices rise instead of fall as expected.  An unexpected spike in prices will force short sellers to cover their positions at once. This is known as a short squeeze. When this happens, all traders who have shorted the stock scramble to buy the stock back quickly before the price goes even higher. With such high demand, those who hold the stock assume full control and the stock price rises far beyond its true value. Short sellers who fail to cover their positions fast enough can end up with huge losses.
  • Short selling also comes with a number of costs that can eat into one’s returns significantly. For starters, short sellers are normally charged stock borrowing costs that, in worst case scenarios, can exceed the profit from the short trade, especially when dealing with stocks that are difficult to borrow. Also, because short selling is done in margin accounts, traders must pay for margin interest on positions taken. Short sellers also must turn over any dividends and distributions paid on borrowed stock. If the trader isn’t careful, the costs can bite out trading gains.

How Traders Go About Short Selling

To be able to engage in short selling one first needs to open and finance a margin account. The standard margin requirement is 150%, which means one must set aside 50% of the value of the stock at the time of borrowing in that account. For example, if one wishes to short sell 100 shares of a company going for $10 a share, one will need about $500 in a margin account.

  • Short sellers use screening tools to identify potential short candidates whose price might have run ahead of fundamentals and are destined to trade lower.  Stocks with prices hitting lower lowsat higher volume, signify that sellers are running the show, which implies possible further movements on the downside. Stocks that have rebounded considerably from a downtrend also provide short selling opportunities especially if they are trading in overbought territory.  While in overbought areas, stocks tend to lose upward steam providing a chance to profit on the price plummeting back to the lows.
  • Once a short position is triggered in a stock, implementing a kind of protection on the order is ideal. In this case, a buy stop order or a trailing buy stop order can come into play as a way helping manage a potential loss, especially during a short squeeze. A short squeeze happens when there is a lack of supply to cover the excess of demand for a particular stock. Short sellers are then forced to buy stock to cover their positions, resulting in an uptick in buying volume and therefore a higher price for the stock.
  • A buy stop order is used to trigger a market order to buy stock once the price rallies back to the stock price entered.  A trailing buy stop order, on the other hand, adjusts the trigger price for taking profits as the stock price moves lower.

How to Use the MarketBeat Short Interest Tracker

Investors can use the pull-down menus to screen for specific stocks based on categories such as stock sectors, market capitalization, investor sentiment, and analyst sentiment. Investors can also choose to screen for the largest position which means they can look for the most shorted stocks or the least shorted stocks.

The screener pulls U.S. stocks from both the New York Stock Exchange (NYSE) and the Nasdaq. Along with the stock listing, investors will get an indicator that provides insight as to why the stock has high short interest (e.g. an upcoming earnings report or recent analyst revision).

The Final Word on Short Selling

Short selling is an important trading strategy that allows traders to profit when the market falls. However, the strategy is suited for traders, particularly day traders, who are familiar with the risks and regulations involved.

Taking into consideration the risks involved, this strategy is ideal for disciplined traders who know how to cut their losses and cover the losses that they do incur.  The approach is also ideal for people who are willing and ready to handle unlimited risks. Short selling also requires constant monitoring as holding an unprofitable position for long may not be a viable strategy for many investors.

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