Definition
A fast price jump that forces short sellers to buy back, which pushes the price even higher.
The story
Short sellers profit when prices fall. If the price rises instead, their losses grow, and buying back to get out adds even more buying. In January 2021, GameStop shares soared while the stock was heavily shorted. An SEC (Securities and Exchange Commission) staff report later found that short sellers buying back added to the jump, but that buying from other investors kept the rally going.
Why markets watch it
Coverage uses it when a heavily shorted stock or market suddenly surges.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms