Did GME short sellers unwind by buying back shares, or in some other way?

Question

A few weeks ago, short interest in GameStop (GME) was around 140%. Float is around 47 million, so total tradeable shares would have been about 113 million.

According to reporting I have seen, it has now decreased dramatically. For example, this source says it is now 53%:

https://www.bloomberg.com/news/articles/2021-02-01/gamestop-sinks-as-shorts-interest-drops-retail-looks-elsewhere

If this is correct and it was all accomplished by purchasing stocks and returning them to the lenders, I believe the number of tradeable shares would have decreased to 73 million, a decrease of 40 million shares.

Did the number of tradeable Gamestop shares decrease by 40 million shares over the last 1-2 weeks? If not, how did short sellers most likely unwind their positions?

I have heard some speculation as to why this decrease didn't happen, but they don't seem credible to me.

1. The S3 number is calculated as short/(float + short), so my numbers above are simply wrong. However, I have seen in many other news sources that the short percent has decreased dramatically, which wouldn't be true if the S3 report is correct. 140% short interest translates to 58% by this measure, so a decrease to 53% is not that significant.

2. I have heard that they can use options to cover their short positions. But to me (I don't know a lot about trading), it seems like these options would leave another seller short a share, so float wouldn't decrease.

Answer 1

I have heard that they can use options to cover their short positions. But to me (I don't know a lot about trading), it seems like these options would leave another seller short a share, so float wouldn't decrease.

Options can be used to acquire shares or sell shares but they do not circumvent the rules for shorting.

If I am short the shares and long a call, my call covers a portion of the upside share price movement risk. Since a call gives you the right to buy shares at the strike price, if I exercise my call, I will buy 100 shares per call and those purchased shares will cover/close an equal number of short shares.

The end result for the counterparty depends on whether he owned the shares that I bought from him or not. If not, he goes short unless the stock isn't borrowable. Then, he must buy the shares delivered to me in the open market.

However, the most common way to unwind short shares is buying them back.

I leave answering the rest of your question to those with access to good data and the understanding of that data.