– what is short squeeze in stocks
In: Economics
A short:
– You borrow stocks that you believe are going to decrease in value
– Sell them immediately, wait, and buy them back to return to the original owner
– the profit comes from pocketing the difference between the higher value when you sold it and the lower value when you repurchased it
A short squeeze:
– when a lot of people short the same stock, and the increase in transactions on that stock causes the price to spike suddenly instead of continuing to drop
– This forces the people who are shorting the stock to buy it at the higher price, because they are borrowing the stock and don’t own it, costing them money
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