• What is a short squeeze? Understanding why they happen and how they work

    7 days ago - By Business Insider

    A short squeeze afflicts short-sellers, investors who have sold stocks they don't actually own, in hopes of buying them back later for less money. If the stock rises instead, the strategy goes awry.
    Caroline Purser/Getty
    A short squeeze is when a shorted stock's price rises and sellers close their position to avoid a loss.
    Signs of a short squeeze include frequent buying of a high number of shares being sold short.
    Buy-limit orders and hedging strategies offer short-sellers some protection against a short squeeze.
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