odd-lot short sales

Odd-Lot Short Sales

Short sales in quantities of fewer than 100 shares each. Generally speaking, one engages in short sales because one expects the price of a stock to fall. Likewise, most odd lotters are small investors. Because many investors consider small investors poorly informed and therefore wrong most of the time, they believe a large number of odd lot short sales may be a sign that stock prices will in fact rise.

odd-lot short sales

The number of shares sold short in less than round lots. Because investors trading odd lots are viewed by many market analysts as unsophisticated, many odd-lot short sales are interpreted as bullish. The number of shares sold short in odd lots is sometimes used to construct an index to gauge small investor speculative activity. The index is calculated by dividing odd-lot short sales by total odd-lot sales. A rising index, indicative of increased speculation by less sophisticated investors, is a bearish sign.
References in periodicals archive ?
Neither the day of the week effect nor the turn of the year effect were statistically significant, and odd-lot short sales were not related to the previous day's price change.
Technical trading rules based upon odd-lot short sales assume that the trades are being done by unsophisticated individual investors.
In fact, Norris (1986) claims that the dominant traders in odd-lot short sales are professional traders rather than unsophisticated individuals.
The empirical results from this study indicate that odd-lot short sales follow such a model.
Two variables are assigned to represent odd-lot short sales in either December or January.
The change in odd-lot short sales should be positively related to this variable.