Processing math: 100%

Days to Cover Calculator

Formula

The formula to calculate the Days to Cover (DTC) is:

$DTC = \frac{SS}{ADV}$

Where:

$DTC$ is the days to cover
$SS$ is the number of shares sold short
$ADV$ is the average daily trading volume

What is Days to Cover?

Days to Cover, also known as short ratio, is a financial metric used to understand the liquidity of a company's shares. It measures the number of days it would take for all short sellers to cover their positions if the price of the stock begins to rise. A higher days to cover ratio can indicate a higher potential for a short squeeze, which can lead to a rapid increase in a stock's price.

Example Calculation

Let's assume the following values:

Shares Sold Short (SS) = 1,000,000
Average Daily Trading Volume (ADV) = 200,000

Using the formula to calculate the Days to Cover:

$DTC = \frac{1,000,000}{200,000} = 5 \text{ days}$

The Days to Cover is 5 days.