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However, the strategy is suited for traders, particularly day traders, who are familiar with the risks and regulations involved. Investors can use the pull-down menus to screen for specific stocks based on categories such as DowMarkets Forex broker stock sectors, market capitalization, investor sentiment, and analyst sentiment. Investors can also choose to screen for the largest position which means they can look for the most shorted stocks or the least shorted stocks.

As attention surrounding GME grew, the stock’s price continued to climb, attracting more investors. This put market makers in the position of having to buy additional shares, which meant more price increases. As the stock’s price continued its unprecedented rise, hedge funds that were short in the stock finally were forced to close out their positions, in some cases booking billions in losses. Shares that are sold “short” are borrowed then sold with the hopes that the share price will drop before the shares that were borrowed have to be repurchased and returned. A large amount of short interest indicates that some investors believe a stock’s price will decline in the near future.

Therefore, on paper, it doesn’t seem like a viable candidate for short-squeeze stocks to buy. Presently, Omega Flex ranks number 80 in Fintel’s Short Squeeze Leaderboard. The security features a short float of 15.5 and nearly 56 days to cover. Typically, hitting double digits on each metric represents a higher-than-average magnitude of bearishness. However, pessimists must be super careful in how they approach OFLX.

If all stockholders could profit from a stock’s value rising, but no one could profit from the stock’s value falling, there would be very little pressure to keep the stock’s price in line with reality. In a similar fashion to the other name on this list of penny stocks, Waitr Holdings has been under pressure over the last few months. Waitr’s on-demand food ordering and delivery platform is targeting userbase in smaller markets. While no further catalysts came from that original October 7th argument, there are some things to keep in mind heading into November. This is namely the company’s financial results and corporate update.

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And indeed, in some situations, shorting can be a perfectly rational strategy. However, many retail investors have rebelled against short sellers due to some of their favorite stocks – such as GME and AMC – being targeted by rampant short selling. The consumer products and digital marketing company merged with TikTok rival Lomotif. Our risk management models were signalling for a reduction in risk and position sizing in nickel going into the short squeeze, due to the significant volatility in markets. It is crucial that investors have confidence that a regulated exchange will always act as an impartial counterparty to both buyers and sellers in a market. While the final verdict on the governance of the LME is still to be decided, it highlights the importance of dealing with trusted counterparties that do not act to benefit one side of a market relative to others.

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If the security’s price begins to rise, they will start buying it. If there is enough buying interest, short sellers may begin to get squeezed out of their positions. A short squeeze typically unfolds after a stock’s been declining in price for some time. The decline in price attracts more and more short sellers looking to profit from the fall in price. At some point, considerable buying pressure begins to enter the market. Gamma squeezes can occur as the result of widespread speculation about where a stock’s price may be headed.

  • Options trading in general is riskier than trading stocks, mutual funds or ETFs simply because there’s a certain amount of guessing that goes on about what will happen with a stock’s price.
  • Just be forewarned that this list is for informational purposes only.
  • For example, if a stock has 100,000 shares short, but only an average of 20,000 shares traded per day, it would theoretically take short sellers five days to cover all of the short positions.
  • Shares of Beyond Meat are currently moving upward from the long-term support level of $100.

This can effectively create an upward spiral in which call buying triggers higher stock prices, which results in more call buying and even higher stock prices. A squeeze can occur when short sellers are forced into buying to cover their position, which can cause shares to go much Exchange-Traded Funds: an Overview higher on many occasions. The gradual deterioration of the consumer economythis year, it’s understandable why the bears targeted CRCT. To no one’s shock, CRCT ranks 85 on Fintel’s Short Squeeze Leaderboard. Presently, it features a short ratio of 14.2 and nearly 31 days to cover.

Penny Stocks to Watch Amid High Market Volatility

Too many times, rookie traders focus simply on the short percentage of float. However, the best short-squeeze stocks to buy represent a multidimensional framework. That way, when panicked bears attempt to cover, they can neither run nor jump.

5 stocks ripe for short squeeze

Needless to say, WTRH stock continues gaining attention in the market. Once repurchased, the trader returns the borrowed shares to the broker and pockets the difference in selling price and the repurchase price . The thing to remember when it comes to shorting is that you’re borrowing shares, not money.

Shares in GameStop rose by over 2000% in three weeks

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5 stocks ripe for short squeeze

The stock went on something like a 30% move from there in just a few days, but I suspect there may be something bigger coming. The shorts have kept the price under control for six days now, but will it continue? A mini short squeeze may still be in the cards, and who knows, maybe even something bigger. But with a punishing fee rate of over 267% as I write this (!!) and a negative rebate rate almost as big, there’s only so long before something gives. Fintel shows 69% of the float short and a cost to borrow of 199%, both among the highest for the week.

Fintel shows 30% of the company’s float short and a cost to borrow of 32%. Fintel shows institutional fund flows in the stock negative with owners declining and allocations declining as well. The most recent short squeeze was the nickel market in March 2022.

Scanning for a Short Squeeze

Blink has also been subject to quite a lot of short selling over the past year. Vinco Ventures’ small market capitalization (its current market cap stands at ~233M) and high Reddit exposure have made it susceptible to significant, retail-based price volatility since September of last year. Is a California-based electric vehicle maker and a former SPAC merger. However, since becoming a publicly-traded company in December 2020, Canoo has been the target of much investor skepticism. Check out this step-by-step guide to learn how to find the best opportunities every single day. Josh Kohn-Lindquist has no position in any of the stocks mentioned.

The Final Word on Short Selling

Consequently, short interest in Warby Parker has grown substantially. And with the stock still trading well below its all-time highs, there’s potential for further upside. So, for those looking for short-squeeze stocks, Warby Parker is worth considering.

PepsiCo hopes to Bring Beyond meat to the multi-billion-dollar meat snack industry while McDonald’s and Taco Bell obviously want to go the route of fast food. The latest news in What is a Moving Average? that regard is a test of the Beyond Meat’s McPlant burger at some McDonald’s US locations. Since the beginning of this year, LOOP has hemorrhaged nearly 72% of its market value.

Chase isn’t responsible for (and doesn’t provide) any products, services or content at this third-party site or app, except for products and services that explicitly carry the Chase name. While a necessary part of the market, short selling also has its fair share of risks. Second, if the stock price does fall below the sales price, the trader buys back the equal number of shares at the lower price.

Experiencing a dislocation, such as a short squeeze, is a fact of life when you run portfolios for long enough. It highlights the importance of appropriate position sizing, diversification and having an exit strategy when things do not go to plan. The Volkswagen short squeeze in 2008 – the ‘mother of all short squeezes’ – resulted in considerable controversy, drawing attention to both systemic and unexpected market risks. While the loss is significant, it is important to note that Electrameccanica is a young company that is still in the investment phase. The company is encouraged by strong top-line growth and remains committed to its long-term goal of becoming a profitable and sustainable business.