Short Squeeze

Category: finance

A phenomenon where a heavily shorted stock rises, forcing short-sellers to buy shares to cover positions.

A squeeze is a "piling on" effect. When the stock price rises, those who bet against it panic-buy to exit their losing positions. This massive rush of new buying drives the price even higher, potentially bankrupting the short-sellers.

Common Examples

• The retail buying frenzy triggered a massive short squeeze, sending the stock up 300% in a single day.
• Risk managers must always track short interest levels to identify stocks vulnerable to a sudden, price-distorting short squeeze.