Short Squeeze
A short squeeze occurs when heavily shorted assets rise sharply, forcing short sellers to buy back shares to cover losses. This buying pressure pushes prices even higher, triggering more covering in a feedback loop that can create explosive moves.
Understanding the Concept
• Requires high short interest (percentage of shares sold short) • Triggered by unexpected positive news or coordinated buying • Can cause prices to detach from fundamentals temporarily • Famous examples: GameStop (2021), Volkswagen (2008)
Real-World Example
GameStop has 140% short interest when retail traders on Reddit start buying. Price rises from $20 to $40, then short sellers scramble to cover. Their buying pushes it to $100, then $483. Hedge funds lose billions. Many shorts can't cover because there aren't enough shares available at any price.
How Strykr Helps
Strykr's AI assistant helps you understand and apply Short Squeeze concepts to your trading. Get personalized guidance and real-time market analysis to make better decisions.
Try Strykr Free