Ever heard the expression, caught with your pants down? Ever wonder what the talking heads mean when they mention short squeezes? A short squeeze is when a short seller of a stock is caught with his pants down.

Short sellers sell stock they don't own with the intent of making money by later buying it back at a lower price.

If a stock price goes up instead, they will need to buy it back at a higher price and will lose money.

To cut their losses, they may try to buy it back as soon as they can. If there was a lot of short interest a lot of people will be buying back stock. This may give an extra boost to the rise in price.

If you own a stock in which short interest has been high and you see a jump in price for some sort of good news it might be an opportunity. If you were thinking of selling anyway, you might be able to sell at a pretty good price.


Laurie Frederiksen
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