Five Savvy Squeeze Plays

When short sellers feel the pinch, smart investors can gain. Here's S&P's selection of strong stocks with squeeze potential

Traders with short positions -- i.e. market bets that stocks will go down in price -- may find themselves in an unpleasant situation known as a short squeeze. That's when the traders are forced to buy the shares of the company they shorted in order to cover their positions and avoid losses. As the shorts pile in to buy the shares, the price can rise further, aggravating their losses. But their losses may be other investors' gains, if savvy market players can identify those stocks with potential to get caught in a squeeze.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.