InterDigital Inc (IDCC)

[hock1]

To get back to the issue of the increasing short interest and the trading surrounding expiration of options last Friday...

Because there is a 10-day lag (and actually as much as 13 days due to settlement) in the reporting of short interest it is difficult to come to any reliable conclusion about the correlation of short term trading to the movement of the short interest number

That said, IMO the increase in the short interest is the accumulation of short-term short trades, made (often on downticks) in order to "shake" shares out, that are never covered and therefore have to be borrowed and, in turn, added to the short interest. In other words, the shorts are not saying "IDCC is overvalued so I think I'll short some more". The increase is due to these unsuccessful attempts to move the stock down.


On a parallel note, as I had mentioned after trading last Friday, I believed that the inordinate number of calls in the money most likely comprised a large amount of naked calls that would necessitate the buying of stock in order to deliver to the call buyers before Wednesday's close. (T+3). I believe that this was borne out in the actual trading that occurred: IDCC continued its upward bias even in a down market.