Short interest represents the total shares of a particular stock that have been shorted but haven’t yet been closed out. Phillips 66 Partners’ (PSXP) short interest as a percentage of its shares outstanding for the settlement date of December 30, 2016, was 2.7%. This value was more than double the amount from the settlement date of December 15, 2016.
PSXP’s current short interest is on the high side compared to its average of ~1% since its inception in 2013.
The above graph shows the changes in PSXP’s short interest since the beginning of 2016. The partnership’s current short interest is at a high compared to the beginning of 2016. High short interest in PSXP’s stock likely indicates that investors expect its price to fall further in the near future.
High short interest, or any sudden rise in short interest, in a stock generally indicates that investors expect the stock to fall. However, the price may not necessarily fall, either because investors are wrong or because the price rises as investors buy the stock to cover their short positions.
Short interest ratio
The short interest ratio indicates the number of days it will take for short sellers to cover all their positions in a stock. It’s calculated by dividing short interest by the average trading volumes for a particular stock.
Phillips 66 Partners’ short interest on December 30, 2016, was ~2.8 million shares. Its average daily trading volume was 0.5 million shares. As a result, Phillips 66 Partners’ short interest ratio was 5.6x, indicating that it would take 5.6 days to cover all open short positions in PSXP.