What does Short Squeeze mean?

A short squeeze happens when a heavily shorted stock rises sharply, forcing short sellers to buy shares to cover their position — which pushes the price up even further.

When a lot of investors have shorted a stock and it starts rising instead of falling, short sellers rush to buy shares back to limit their losses (called 'covering'). That buying pressure pushes the price up even more, which forces more shorts to cover — a feedback loop that can send a stock sharply higher in days.

Short Squeeze example

A stock with 30% of its shares sold short jumps 15% on good news. Short sellers rush to buy back shares to cap their losses, that buying pushes the price higher still, and the rise feeds on itself.

Common beginner mistake

Buying into a squeeze late. Once the shorts have covered, the forced buying stops and the price can collapse as fast as it rose.