Short interest ratio, known also as days to cover, is a metric used to evaluate the levels of bearish pressure affecting a stock. The greater the value, the heavier is the pressure. In order to calculate the short interest ratio, the average daily trading volume of the stock is divided by the number of shares that are shorted. Simply defined, by comparing a stock's short interest to its average daily trading volume, the ratio can instantly inform an investor if a stock is highly shorted or not. At some point stocks that are heavily shorted will start attracting buyers. If the buying pressure keeps growing, it will trigger what's called a short squeeze, a situation where short sellers are trying to get out of their short position as quickly as possible. A short squeeze will generally create a bullish wave that will lift the price significantly.
The market has been range bound for the last few weeks with volatility on the decline, and earnings all over the place. So where to go to look for a trade? Nike has already had Earnings and is near a low of the year, so seems like a good option. As a contrarian that can mean only one thing to me: I have to make a trade with the assumption it will go up from here over the next 45ish days. We will do that by making a Long Call Vertical trade to bet that it starts to head up over the next couple months. For more on my trading and how to join me in real time, see below. Watch the video to get the details. Kal Trading Risk Disclaimer All the information shared in this video is provided for educational purposes only. Any trades placed upon reliance of SharperTrades.com are taken at your own risk for your own account. Past performance is no guarantee. While there is great potential for reward trading stocks, commodities, options and forex, there is also substantial risk of loss. All tr