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If you've already joined, you no doubt have seen traders talking about SE all over. Confused? Look no further, your answers to all SE (short exempt) questions are below!
Why does SE Matter to BigShort Traders?
High SE readings very often come immediately before large volatile moves in a stock. For BigShort traders, SE is a way to identify which tickers to pay attention to in the coming day or days.
How do I find SE on BigShort?
You can find the Top 10 Short Exempt tickers in the Dashboard tab. There you'll find stocks that are likely to experience significant volatility. See below in Pink. Notice the top two tickers on the top 10 last night, INOD and HIMS (for a play-by-play using SE to trade HIMS read this).
From the dashboard tab you can dig deeper in two ways:
1. click on the ticker you want to dig into on the 10 top list
2. click through to the Short Volume tab (blue box, below) and click "short exempt" in the checkbox above (pink box, below) to see more detail about a specific stock.
A large SE bar on the bottom (red box, above) is a sign of likely coming volatility (something you can trade profitably).
The next day, you trade using the Big Four big short indicators as normal. Check out this breakdown of PLTR for a play-by-play.
What Is Short Exempt?
For those curious, here's a bit about what's happening under the hood with SE. Short exempt is a special short-selling designation that sidesteps certain trading restrictions, particularly the short sale restriction (SSR).
Why Does Short Exempt Lead to Volatility?
Uptick Rule Exemption: Under the SSR, traders can only short on an uptick (i.e., when the stock trades above the last sale price). A short exempt order bypasses this rule.
Market Maker Liquidity: Most short exempt orders come from market makers who must maintain liquidity. It’s not a blanket exemption for all shorts. This means high SE is likely a sign that the market makers are out of position and the stock needs to reposition.
Tape Reading: Seeing short exempt in the order flow can signal that a large participant is shorting without typical SSR constraints. This may affect the pace of selling.
Pro Tips
Watch for Unusual Shorting Activity: Short exempt orders can move a stock’s price aggressively during SSR periods.
Corroborate Signals: Combine short exempt data with other BigShort indicators to build confidence in the direction and duration of the trade — Net Options Flow, Dark Pools, and MomoFlow to gauge market sentiment. Enter if a confluence of signals agree.