A sharp rise as short sellers rush to buy back shares
A short squeeze happens when short sellers, trying to limit losses on a rising price, buy back shares all at once and push the price even higher. Short sellers have sold borrowed shares, so they must buy them back eventually, and their losses grow the further the price rises. Squeezes are said to be more likely when short interest is large relative to trading volume. Once the buying back runs its course, the price can fall back quickly.
A stock with short interest equal to 10 days of volume can jump 40% in three days on good news.
For learning, not investment advice. Decisions are your own.
StockFit · TrueNorthLabs Inc.