This one, though, is not about a single stock. We’re currently in arguably the largest short squeeze in history something measured in trillions rather than billions, and lasting for years now. However, a short squeeze of even that size is tiny compared to what is occurring now, without hyperbole. Porsche then began to buy a larger stake in Volkswagen, which caused shorts to cover the positions, which then triggered a vicious cycle, temporarily resulting in a stock price bubble. As one of the largest automakers in the world, Volkswagen encountered challenges during the recession, and was heavily shorted. Volkswagen briefly became the world’s most valuable company during the global financial crisis due to a short squeeze. For example, Volkswagen’s short squeeze that happened more than a decade ago was huge. Every once in a while, though, a giant short squeeze occurs. Short squeezes are more common with smaller companies, with dollar amounts that are not very large even though the percent increase can be quite substantial. This creates a vicious cycle of more and more buying pressure until the imbalance is finally unwound after buyer exhaustion. Traders that see the short squeeze occurring can also buy into it, further exacerbating the price increase. That rise in price forces many short-sellers to cover their shorts, meaning they have to buy the security and thus unintentionally help push the price up further, which can force even more ardent short-sellers to buy-to-cover their positions as well. This has been the case well before the impacts from the trade war and the coronavirus.Ī short squeeze occurs when something that is heavily shorted goes on to rise sharply in price for one reason or another. There is currently a short squeeze affecting most of the global economy, slowing its growth.

Vw stock squeeze