Mark,

A warrant holder may not short all the stock their warrants exercise into, only a portion. Some warrant holders trade the stock around the warrant exercise price. Hence the higher the price of the stock rises above the exercise price, the greater the short. If you recall the short position almost disappeared this summer when the stock was around $1.00 because the short was covered. So a person with 1 million warrants with an exercise price of $1.70 may only be short 500-600k shares right now.