Short Squeeze

A short squeeze happens when traders who have bet against a stock or asset—by selling it short—are caught off guard by a sharp price increase. As the price climbs, these short sellers start losing money and may be forced to buy back the asset to limit their losses. This surge in buying can drive the price even higher, adding more pressure on other short sellers to exit their positions. As more shorts rush to buy back the asset, the price can spike rapidly and become highly volatile—often rising far above what the asset is fundamentally worth. Short squeezes can create extreme, fast-moving trading situations and unpredictable price swings.