Understanding Short Interest in a Popular ETF

IWM, the iShares Russell 2000 Index fund, is undoubtedly a very popular ETF. As of 11/4/11, the fund was the 10th largest ETF by AUM, with approximately $17 billion under management. If you look at it from a volume perspective, on the same day, the average daily volume of the fund ranked fourth among all ETPs at approximately 84 million shares trading per day.

The short interest in this fund is very high. As of October 20, 2011, there were 184.1 million shares outstanding in the fund and short interest of 277,134,414, as per Bloomberg. This indicates that more shares were short in the ETF than there were shares outstanding on this date. And as has been explained previously, this can take place in ...

Get Visual Guide to ETFs now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.