A short squeeze is a trading scenario where the price of a stock or other asset jumps sharply higher, forcing traders who had bet that its price would fall to buy it in order to prevent even greater losses.
The market will make a hard push to the upside due to new buyers and short traders buying to cover their trades. Creating significant buying pressure.
The result is a “squeeze” on those who had bet the stock’s price would fall. Short squeezes can be intentional, driven by other investors who buy up shares to trigger the squeeze, or they can happen organically if positive news about the company is released. Either way, it’s a high-risk, high-reward situation.
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