This week's edition of Options Spotlight takes a step back from the usual brisk option trading to look at 1 of the key indicators that I use when examining sentiment toward a security.
Short interest can be a useful sentiment indicator, since it measures the level of investor pessimism toward a given stock. Specifically, short interest is created when an investor sells shares of a stock that he or she has borrowed from a broker, but does not own outright.
A basic short-selling strategy is profitable when the price of the shorted stock declines, allowing the investor to buy the stock back at a lower price in order to replace the borrowed shares.
Newly revised and updated, Bernie Schaeffer's home study program, "10 Days to Successful Options Trading," provides a foundation for your options trading success. Includes easy-to-follow guide, CD, DVD, and a special report – Click here to learn more.
Copyright Schaeffer's Investment Research. www.schaeffersresearch.com.
