What is a Short Squeeze and How Can You Profit From It?
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You may have heard of the term "short squeeze" in the past - but didn't know what it meant. I'm here to tell you what it is and how you can capitalize and profit from a short squeeze.
What is a short squeeze?
There are two players in the market. There are the "longs" and the "shorts" which are equivalent to buyers and sellers.
Buyers are looking for the stock to head higher while Sellers are looking for the stock to head lower.
Sellers typical are borrowing shares from their brokers - then will look for the stock to head lower - they'll purchase it back at a lower price and pocket the difference. These are called "short sellers."
Posted at: http://tradersfly.com/2015/04/what-is-a-short-squeeze-and-how-can-you-profit-from-it
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In this video are we referring to sellers/shorts as options trades only? Like, if they borrowed shares from their brokers to buy back at a lower price they'd only lose money if they did it via a short options trade?
Rahul Kiron I agree. The "squeeze" in a short squeeze results from a lack of sellers. Value buyers and unlevered buyers have scooped up so much of the free float at unsustainable low prices that shorts are suddenly forced to cover at significantly higher prices as there are no sellers at the lower prices.
Is there an indicator on a chart to tell when someone is buying shares and when a short is repaying their borrowed stock? For instance, a daily chart shows red/green bars in the volume... is there an indicator to tell what's actually going on?
+Ashton Ball most tools will have a short indicator. If you are using TC2000 just select the library and then short Interest, it wont have the short float percentage though so if that is what you are looking for but you can find that on finviz.
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