Have you ever heard of short selling? It's like betting that a stock's price will go down. The short interest ratio tells us how many people are doing this. It helps us understand if people think a stock will go up or down. It doesn't predict the future, but it gives us a clue!
- Many investors bet against a stock's price going up (short selling).
- The short interest ratio shows how long it would take these investors to buy back the stock.
- A high ratio means lots of people bet against it, which *might* mean the price could drop (or jump up if many people suddenly want to buy).
| Term | Meaning (simple!) |
|---|---|
| Short Selling | Betting a stock price will fall. |
| Short Interest Ratio | How long it takes to buy back all the shorted stock. |
| High Ratio | Lots of people bet against a stock. |
| Low Ratio | Fewer people bet against a stock. |
