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Glossary Term: SHORT INTEREST

Definition(s) for SHORT INTEREST:


1. ) refers to total number of shares of a given stock that have been sold short and not yet repurchased. Usually, investors sell short to profit from price declines. This is the total number of shares of a security that investors have sold short -- borrowed, then sold in the hope that the security will fall in value. An investor then buys back the shares and takes in the difference as profit. As a result, the short interest is often an indicator of the amount of pessimism in the market about a particular security. On the flip side, short interest represents dormant demand for a stock that may come to life if short sellers must cover their positions due to a marked rise in the stock's price. So a large short interest can ultimately push the stock higher. There are also other reasons to short that are not related to pessimism. For example, hedging strategies for mergers and acquisition as well as derivative positions may involve short sales.



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