Term · Liquidity & Trading
Days to Cover
In briefDays to cover estimates how many trading days short sellers would need to cover their positions at average volume. For illiquid small-caps, a high value can explain extreme price jumps on positive news.
Definition
An estimate of how many trading days short sellers would need to cover their positions at average volume.
How it is calculated
Formula. Days to Cover = shares sold short ÷ average daily trading volume.
Why it matters for small caps
For illiquid small-caps, a high metric can explain extreme price jumps on positive news.
Common misreadings
- It is understood in isolation as a buy signal; without a catalyst, high short interest can persist for a long time.
In the process
Frequently asked
What is days to cover?
It is the estimated time it would take to cover all short positions. It relates short interest to trading volume.
How do you calculate days to cover?
You divide the number of shares sold short by the average daily trading volume. The result is the covering duration in days.
Is a high value automatically a buy signal?
No, without a catalyst high short interest can persist for a long time. Only positive triggers can force a covering.
Related terms
Sources
Primary
Deutsche Börse – Marktstruktur
https://www.deutsche-boerse.com/dbg-de/maerkte-services/ps-preipo-listing/ps-marktstruktur
https://www.deutsche-boerse.com/dbg-de/maerkte-services/ps-preipo-listing/ps-marktstruktur
Methodology
NYU Stern – Aswath Damodaran, Valuation Resources
https://pages.stern.nyu.edu/\~adamodar/
https://pages.stern.nyu.edu/\~adamodar/
Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.