Question 99—The Short Interest Ratio
Answer 1 The number of shares held short by the bears relative to the “free float.”
The Short Interest Ratio compares the number of shorts held by the bears with the “free float” in any given stock. The free float is the number of shares available for shorting—the total number issued by the company minus restricted stock granted to executives, shares held by “strategic shareholders,” and insiders’ holdings. Brokers report the number of shares that have been shorted and not covered. If you divide that number by the total free float, you’ll have the Short Interest Ratio, reflecting the intensity of shorting in any given stock.
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