Let's use a simplified example: suppose you sell short 1,000 shares in Company A. You haven't borrowed the shares. Still, you're betting on a rapid downturn in the stock price for Company A, which makes this not a problem—the price going down should mean many sellers are looking to...
Ashort squeezeoccurs when short sellers scramble to replace their borrowed stock, thereby increasing demand, decreasing supply, and forcing prices up. Short squeezes tend to occur more often insmall-capstocks, which have a very smallfloat(supply).Large capsare certainly not immune to this situatio...