Glossary / Market structure

Days to cover

Also called: short ratio · short interest ratio

Days to cover is short interest divided by average daily trading volume. It estimates how many sessions of ordinary trading it would take for the whole short position to be bought back, if that buying were the only activity.

How it is measured

How is days to cover measured?

Divide the reported short interest by average daily volume over a recent window, commonly a month. Both inputs are backward-looking, and the short-interest figure carries its own reporting lag, so the ratio inherits the staleness of the older of the two.

Why it matters

Why does days to cover matter to a swing trader?

The ratio normalises a raw short position against how much a security actually trades, which is what makes it comparable between a mega-cap and a small-cap. Its built-in assumption is also its main weakness: it implicitly treats future volume as equal to past volume, and volume expands sharply in exactly the conditions where the ratio is being consulted. A high reading describes a position that is large relative to recent liquidity — nothing more.

In Tapeline

Does Tapeline use days to cover?

Days to cover is one of the inputs to Tapeline's squeeze detection, a separate surface from the six-factor composite score.

Tapeline publishes the six factor names and the ordering of their weights. The numeric weights, the scoring equation and the band edges are not published.

Related

See this in the product

The squeeze scanner · Full methodology

Related terms

Short interest
Short interest is the number of a security's shares that have been sold short and not yet bought back.
Short squeeze
A short squeeze describes a sequence in which a rising price forces holders of short positions to close them, and closing a short position requires buying — which adds to the buying pressure that is already pushing the price up.
Volume
Volume is the number of shares that changed hands over a period.
Float
Float is the number of a company's shares that are actually available to trade in the open market.

Back to the full glossary.

General information about market vocabulary, written to be descriptive rather than prescriptive. Not investment advice — see the risk disclosure.