What is a Short Squeeze?
A short squeeze happens when a heavily shorted stock, meaning many investors have bet it will fall, is suddenly propelled upward. Short sellers must buy shares to cover their positions, causing the price to spike further. This can trigger a rapid, self‑reinforcing rally
$OPEN: A Prime Case Study
Over the past month, $OPEN surged 500%, with a jaw‑dropping 170% in just five days. Here's what fueled the squeeze:
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High short interest: Around 19–25% of the float was shorted, a red flag for vulnerability.
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Retail frenzy on social media: Posts on Reddit’s WallStreetBets, StockTwits, and hash-viral tweets about Opendoor sparked unprecedented buying momentum.
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Speculative option flows: A surge in call option activity added leverage and volatility, squeezing short sellers even harder.
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Margin calls & stops: With shares racing higher, automated margin calls forced shorts to cover en masse, driving prices up further.
Short-selling: Step-by-Step: How It Actually Works
Here’s how a short sale works behind the scenes:
1. Borrowing the Shares
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You don’t own the stock.
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Your broker locates and borrows shares from another investor’s account (like a pension fund or long-term holder).
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This is done behind the scenes through the broker’s lending program.
2. Selling the Borrowed Shares
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The shares are immediately sold on the open market at the current market price.
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You now have cash from the sale, but you still owe those shares back.
3. Waiting for the Price to Drop
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You wait for the stock to decline in value.
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This is the risky part, if the stock goes up instead, you can lose a lot (in theory, unlimited).
4. Buying Back at a Lower Price (Covering)
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When the price drops to your target, you buy back the shares at the new lower price.
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You return them to the broker or lender.
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Your profit = Sell price - Buyback price
Why Short Squeezes Spiral
A key feature of a short squeeze is reflexivity: as the stock rises, more shorts cover, prompting even higher prices. In some extreme cases, like GameStop in 2021, 140% of float was sold short. $OPEN’s combination of high short interest and explosive retail momentum recreated that classic short squeeze pattern.
What This Means for Hyper Stocks Readers
Short selling can trigger some of the most explosive moves we see, like what just happened with $OPEN.
For traders and investors in the Hyper Stocks community, this isn’t just a Wall Street curiosity, it’s an opportunity.
If you know what to look for, high short interest, low float, building momentum, and a potential catalyst, you can catch these moves before the crowd.
That’s why we created a Short Squeeze Scanner to help you stay one step ahead. This scanner scans for the top gainers of the day, specifically looking for stocks that have less than 100 million shares available and at least 15% of those shares are being held short. We also added one more setting that targets stocks that are trading at a forward P/E of 5x...this means the companies the scanner finds are projected to be profitable in the next 12 months.
👉 Access the Short Squeeze Scanner Here
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