The shorts have cleaned up during the Silicon Valley Bank (SIVB) and Signature Bank (SBNY) mess.

Short sellers — who aim to profit from a decline in a stock price — of regional banks are up a cool $3.53 billion in March month to date in mark-to-market profits, according to new data from S3 Partners. Shorts are up $2.29 billion in mark-to-market profits in the last three trading days alone.

Silicon Valley Bank and Signature Bank had been in the top 20 most-shorted regional bank stocks, S3 Partners says.

Silicon Valley Bank's collapse on Friday was the second-largest bank failure in the U.S. Signature Bank's subsequent failure represented the third-largest banking bust. Both outcomes wiped out shareholders in each.

Regulators stepped in last Sunday to backstop depositors of the banks to prevent the start of a wider financial system crisis.

But bank stocks have still seen wild levels of volatility this week despite the government intervention and, in turn, the shorts have come out of hiding.

The SPDR S&P Regional Banking Sector ETF plunged 23% from March 8 to March 13, according to S3 Partners. Over the last seven days, $416 million of new short selling in the regional banks has emerged amid this drop, S3 Partners says.

That said, with some calm returning back to markets mid-week and bank-bust narratives cooling, the short trade on regionals could be poised to go the other way.

"We should see a wave of short covering in some of the regional banking stocks in response to this sudden spike in stock prices as short sellers look to realize some of their recent $2.29 billion of mark-to-market profits," says S3 Partners' Ihor Dusaniwsky.

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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