Short Interest FAQ
Q: What is short interest?
A: Short interest is the aggregate number of open short sale positions
Q: How can short insight be used for trading?
A: There are a few ways that you can use short insights:
- When there is no change in short interest, but the stock price is falling, you know long holders of the stock have lost confidence and are selling. This may be the beginning of a very significant downward trend. Conversely, when there is little or no change in short interest and the stock price rises, there is natural long-buying occurring in the marketplace.
- If there is an increase in shares shorting, this will cause downward price pressure on stocks, whereas short covering will cause upward price pressure on stocks.
- You can calculate net return when you’re considering a trade: For instance, if you expect your short trade to have a 10% return, but you are going to pay an 8% financing cost, you wouldn’t get into the trade because your net return will only be 2%. It is important to calculate your net return for every short transaction you consider.
- Short interest gives you insight into option pricing for covered calls, protective puts and straight option buying and selling. High stock-loan fee stocks have high option premiums, which make some option trades more attractive and some less attractive. The movement in stock-loan rates generally occurs prior to moves in option premiums.
- It’s important to note that the ways in which you can use the data, are the precise ways in which institutions use it as well.
Q: Why is S3’s short interest data so valuable?
A: Simply put – timing and accuracy. Exchange-reported short interest is published every two weeks for the prior two-week period, meaning that the public data available on shorting could be up to 30 days old. Accurate and real-time short interest data inform the way professionals trade, and Short Sight is the first real-time short interest focused newsletter for retail traders – in fact, real-time short interest data has never been available to retail traders until now.
Q: Why should subscribers trust the data that Short Sight provides?
A: S3 Partners is an official provider of technology to Bloomberg, Reuters and Nasdaq. Our customers – some of the largest financial institutions in the world – and journalists across more than 100 publications (including Bloomberg, WSJ, Business Insider) trust S3 Partners for data, technology and market commentary.
Q: Where does S3’s data come from?
A: We aggregate short interest and finance rates from every relevant part of the marketplace. We source our data from the following:
- BLACKLIGHT SaaS Platform, Blacklight consolidates the thousands of accounts that institutional investors have into one dashboard. We process 5 million daily financing trades every day, totaling $2T of transactions.
- Service Desk: Live confirmation of intraday rates from voice brokered financing markets (S3’s service desk consists of 6 stock-loan traders with more than 100 years of combined experience).
- Subscription Data Feeds: Conventional securities lending data feeds covering $2T on loan and $15T of lendable inventory
- Bank and Broker Inventory Feeds: Data feeds covering $30T from all major market participants
- Regulatory reporting numbers: S3 collects all regulatory reporting files from every public exchange globally and integrates data into our platform.
Q: Where else can users get the data available from Short Sight?
A: The only other way to get the data that we provide to Short Sight subscribers would be to sign up for the BLACK APP on Bloomberg or Reuters and/or purchase an enterprise data license ($100k min price). The data is not available through other sources currently.