Short percentage of float, or short interest ratio, represents the number of shares in the float that investors have sold short. Short selling is when you borrow shares of a stock from your broker and sell those shares in anticipation of the share price falling. If the share price drops, you can buy back (or cover) those shares at a profit. On the other hand, if the stock price rises, the shares can be bought back at a loss. The number is reported as a percentage – the higher the percentage, the greater the number of shares shorted. Some traders look for stocks with a high short interest, hoping to take advantage of a “short squeeze.” A short squeeze can happen when a highly shorted stock begins to rise in price. That can trigger a rush of buying as short sellers try to cut their losses and other investors quickly buy to capitalize on the gains. In certain situations, these gains can be spectacular. Just take the famous example of GameStop Corporation (GME). In early 2021, a short squeeze sent the shares of GME from around $20 to over $480 in a matter of days. While that may be an extreme example, less dramatic short squeezes can happen at any time.