Days To Cover

Not to be confused with metal shred guitarist Zakk Wylde’s Led Zeppelin tribute record, Dazed and Covered, Days to Cover is another term to describe short interest ratio in stocks. If you have a short interest, it means that you've borrowed stock and sold it, betting that the shares will go down in value. At some point, you have to buy back those shores to unwind the short position.

So let's say Whatever.com has 100 million shares outstanding and there are 25 million shares short—big number—and the average daily trading volume is 5 million shares. Pretty low volume trading company. So...you'd say that the Days to Cover here is 5. That is, if you took all of the shares that were traded on that given average volume day, and used them to buy stock (for any reason, but in this case to unwind the short), then it'd take every share for 5 days to get out.

This day-volume is an important number, because when you short stock, you're borrowing shares from the brokerage making the market in it...but you also pay hefty interest on that borrow.

It hurts. To make it go away, you cover your a$$.