The stock market is full of surprises, but few events are as dramatic — or as closely watched — as a short squeeze.
A short squeeze occurs when the price of a heavily shorted stock rises sharply, forcing short sellers to buy back shares at higher prices to limit their losses. This creates a chain reaction, pushing the stock price even higher and leaving some traders scrambling to cover their positions.
Understanding what a short squeeze is and how it unfolds can help you recognize the risks and opportunities it presents. Let’s break it down step by step.
Continue reading “What is a Short Squeeze?”