Short squeeze

Definition:

When a lack of supply tends to force prices upward. In particular, when prices of a stock or commodity futures contracts start to move up sharply and many traders with short positions are forced to buy stocks or commodities in order to cover their positions and prevent (limit) losses. This sudden surge of buying leads to even higher prices, further aggravating the losses of short sellers who have not covered their positions.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Troubled assets

In context of the Troubled Asset Relief Program, the term 'troubled asset' is defined as: (A) Mortgages, mortgage backed securities, and instruments derived from these that were originated on or... Read More

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