Definition
When a heavily shorted stock rises, losses mount for short sellers. Buying to close their positions pushes the price higher still. It usually needs high short interest plus a catalyst.
Watch out for
Squeezes are unpredictable and often reverse sharply. Late buyers often take large losses.
Example
Historical exampleIn January 2021, GameStop's short interest was reported at more than 100% of its float, and its share price rose from about $20 to an intraday high of about $483 within weeks.