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Deckers Outdoor Corp. Message Board

  • bobbii_rotten bobbii_rotten Mar 27, 2013 10:41 AM Flag

    Why am i reading ? @ @ Motley fools???

    Covering can push stock prices significantly higher

    When a stock appreciates in price, a short seller may have to close out a short position by purchasing the same amount of shares that were shorted. This is referred to as "buy to cover" or "covering." Short sellers, as a group, can become panicked by a large uptick in a stock price around a company event (such as an earnings announcement), and may be forced to cover their short positions in order to avoid margin calls from their brokers.

    This, in turn, can create significant upward pressure on a stock's price, called a "short squeeze," as multiple, large buy orders are presented to a specialist or market maker simultaneously. Investopedia explains the short squeeze in this way: "If a stock starts to rise rapidly, the trend may continue to escalate because the short sellers will likely want out. For example, if a stock rises 15% in one day, those with short positions may be forced to liquidate and cover their position by purchasing the stock. If enough short sellers buy back the stock, the price is pushed even higher."

    MAKES $$$$$$$$$$$$$$$ me !!!!

    Sentiment: Buy

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