In stock market terminology, what does "float" refer to?

The term "float" specifically refers to the number of shares available for public trading in the stock market. This includes shares that are not held by insiders, such as company executives or major institutional investors. The float is essential because it represents the portion of a company's shares that the general public can buy and sell. A smaller float can lead to higher volatility in the stock price, as fewer shares are available for trade, making it easier for large trades to impact the stock's price movement.

In contrast, while the total number of shares outstanding encompasses all shares issued by the company, including those held by insiders and other entities, it does not accurately represent the shares available for trading. Similarly, shares owned by company executives are not considered part of the float since they are not publicly traded, and the percentage of shares owned by institutional investors also does not align with the float, as it includes various types of ownership that may restrict trading. Therefore, the correct understanding of "float" hinges directly on its definition as the shares available for public trading.