Short Covering
Short covering occurs when traders reduce or close short positions. Closing a short generally requires buying back the exposure, which can contribute to upward price pressure.
Why it matters to you
If price rises while open interest falls, short covering may be one possible explanation. That is different from a rally driven primarily by substantial new long positions entering the market. Understanding the difference helps traders analyze the character of a price move.
Terms that sit next to this one
See the perpetuals front
The tools, the live market and the course.