Oscar Health's Declining Short Interest and Its Implications for Bullish Momentum

The stock market often turns to contrarian indicators to gauge shifts in sentiment, and short interest-representing the total number of shares sold short-has long served as a barometer for bearish expectations. For Oscar Health (OSCR), the latest data suggests a notable shift: short interest has declined by 2.71% since the prior reporting period, raising questions about whether this reflects a stabilization in investor confidence or a potential catalyst for a short squeeze. As the healthcare technology sector faces ongoing volatility, understanding the interplay between short interest and price action is critical for assessing OSCR's trajectory.

Short Interest as a Contrarian Indicator

Short interest is inherently a contrarian metric. When short sellers aggressively bet against a stock, it often signals pessimism about its fundamentals or technical outlook. However, a decline in short interest can indicate that bearish sentiment is waning-or, in some cases, that short sellers are scrambling to cover positions as prices rise. For Oscar Health, the reduction in short interest to 37.34 million shares as of October 31, 2025-representing 19.29% of the public float-marks a significant shift from earlier levels of 38.39 million shares on October 15, 2025. By November 24, 2025, the short interest percentage of float had further dropped to 16.79%, suggesting a growing reluctance among short sellers to maintain their positions.

This decline aligns with broader technical indicators pointing to bullish momentum. The stock's 20-day simple moving average (SMA) has risen above its 60-day SMA, forming a "golden cross" that historically signals upward trends. Additionally, the Relative Strength Index (RSI) of 61.9 indicates neutral conditions, neither overbought nor oversold, while the MACD line remains above the signal line, reinforcing the positive momentum. These signals suggest that OSCR's price action is increasingly driven by buyers, potentially squeezing short sellers who underestimated the stock's resilience.

Short Squeeze Potential and Market Dynamics

A short squeeze occurs when a stock's price rises rapidly, forcing short sellers to buy shares to limit losses, thereby exacerbating the upward trend. For Oscar Health, the short interest ratio-measured at 2.8 days to cover as of October 31-suggests that short sellers could be vulnerable if the stock continues to climb. This metric implies that, at the average trading volume of 14.71 million shares per day, short sellers could exhaust their coverage in less than three days. However, discrepancies in reporting-such as a 3.66 days-to-cover ratio cited by another source-highlight the need for caution in interpreting these figures.

The stock's price movements in late 2025 underscore this dynamic. On November 24, OSCR surged by 22.33% to close at $16.49, coinciding with a trading volume spike of 58.67 million shares. Such volatility could reflect short covering or institutional buying, both of which amplify the risk of a self-reinforcing upward spiral. While the stock's 52-week range (from $11.20 to $23.79) provides context for its recent gains, the narrowing short interest percentage of float suggests that bearish bets are becoming less concentrated.

Risks and Considerations

Despite the bullish signals, investors should remain mindful of the risks. The 10.95% short sale ratio reported on October 24, 2025, indicates that some investors still anticipate a price bottom. This metric, representing the ratio of short volume to total trading volume, suggests that bearish sentiment has not entirely dissipated. Additionally, Oscar Health's business model faces inherent challenges in scaling profitability within the healthcare technology sector, which could limit long-term gains.

Conclusion

Oscar Health's declining short interest, coupled with favorable technical indicators, presents a compelling case for bullish momentum. The reduction in bearish bets and the potential for a short squeeze create a self-fulfilling dynamic that could drive further gains. However, as with any contrarian strategy, investors must balance optimism with prudence. The interplay between short interest and price action remains a critical factor to monitor, particularly as OSCR navigates a sector marked by both innovation and volatility.