The Top Short Squeeze Stocks in Biotechnology

The biotechnology industry has some of the most volatile stocks, which may be one reason that stock traders like to trade them.

A trading strategy that has become popular is buying short squeeze stocks, the stocks that are heavily shorted but could move up quickly on any good news due to short sellers scrambling to buy in their positions.

When you short a stock, it means that you expect to make money from a drop in the price of a stock. Technically what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. Of course, this all happens electronically, you don’t actually see all the borrowing and returning of shares; it just shows up on your computer screen as a negative number of shares.

Short sellers can make a lot of money, but sometimes when the stock moves against them, the stock starts to move up, and the short sellers jump in at once to buy shares to cover their position. This is called a short squeeze. When a short squeeze takes place, it can cause the stock to rise fast and hard. Any type of positive news can trigger the short squeeze.

So other traders take advantage of this situation buy looking for stocks to buy that may have a potential short squeeze. Here is what they look for:

• Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high, and potential short squeeze plays.
• Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how “stuck” the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.
• Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

Here are some stocks that are heavily shorted that may warrant a closer look. Remember that some stocks are heavily shorted for a reason.

Insys Therapeutics (INSY) has 68% of the float shorted, and a short interest ratio, also known as days to cover, of 14.5. This means that based on the current average daily volume, it would take almost 15 days for short sellers to cover their positions.

Egalet Corp (EGLT) has 64% of the float shorted, with a days to cover ratio of 9.5.

Heron Therapeutics (HRTX) has a short interest ratio of 12.8 and 55% of the float shorted.

Lannett Company (LCI) has 45% of the float shorted, with a short interest ratio of 10.1.

TherapeuticsMD (TXMD) has 39% of the float shorted, with a short interest ratio of 31.9.

Eagle Pharmaceuticals (EGRX) has 42.5%of the float shorted, with a short interest ratio of 11.3. This company also has a very low float and very low number of shares outstanding.

With any luck, you may be able to make a short term profit on short squeeze stocks.

Disclosure: Author didn’t own any of the above at the time the article was written.

Huge Profits With Short Squeeze Stocks

By now, most readers have heard about Keurig Green Mountain, Inc. (GMCR), which jumped about 75% in one day, due to a takeover, and that hedge fund manager, David Einhorn had a short position in the stock. But even a rumor of a takeover can send a stock higher, causing short sellers to scramble to cover their positions, creating what is called a short squeeze.

A technique that stock traders often use is buying short squeeze stocks. Let's go at a more extensive explanation of what a short squeeze stock is and what a short squeeze is.

When you short a stock, it means that you expect to make money from a drop in the price of a stock. Technically what happens is that you borrow shares of a stock, sell those shares, then buy back those shares at a hopefully lower price so that those shares can be returned. Of course, this all happens electronically, you don't actually see all the borrowing and returning of shares; it just shows up on your computer screen as a negative number of shares.

Short sellers can make a lot of money, but sometimes when the stock moves against them, the stock starts to move up, and the short sellers jump in at once to buy shares to cover their position. This is called a  short squeeze. When a short squeeze takes place, it can cause the stock to rise fast and hard. Any type of positive news can trigger the short squeeze.

So other traders take advantage of this situation buy looking for stocks to buy that may have a potential short squeeze. Here is what they look for:

• Short Percentage of Float ~ The float is the number of freely tradable shares and the short percentage is the number of shares held short divided by the float. Amounts over 10% to 20% are considered high, and potential short squeeze plays. 
• Short Ratio / Days to Cover / Short Interest Ratio -This is probably the most important metric when looking for short squeeze trades, no matter what you call it. This is the number of days it would take the short sellers to cover their position based on the average daily volume of shares traded. This is a significant ratio as it shows how "stuck" the short sellers are when they want to buy in their shares without driving up the price too much. Unfortunately for the shortsellers, the longer the number of days to cover, the bigger and longer the squeeze.
• Short Percentage Increase ~ This is the percentage increase in in the number of short sellers from the previous month.

So what stocks are heavily shorted that may be worth a closer examination? Check out the following list, but be aware, that often some stocks are heavily shorted for a reason.

Stock	Symbol	Short Interest	Days To     Cover
Insys Therapeutics Inc	INSY	86%	25
Pilgrim's Pride	PPC	66%	27
SolarCity Corp	SCTY	64%	8
Outerwall, Inc	OUTR	56%	24
Cal-Maine Foods Inc	CALM	52%	24
VASCO Data Security	VDSI	46%	24
Tokai Pharmaceuticals	TKAI	43%	26
MannKind Corp	MNKD	41%	21
Freshpet Inc	FRPT	40%	11
Wingstop Inc	WING	37%	21

Just keep in mind the risks. If you are looking for other stock ideas, check out many of the free stock lists at WallStreetNewsNetwork.com.

Disclosure: Author has a short put position on CALM (bullish).

By Stockerblog.com

Top Biotech Short Squeeze Plays

In the last few weeks, many of the biotechnology stocks have tanked along with the rest of the market, and investors may find some beaten down bargains. The interesting thing about biotech stocks is that when they move upwards, they really move fast and hard, often due to FDA approvals, takeovers, and takeover rumors.

Because of the price drop, there could be some short squeeze plays in this sector. A short squeeze takes place when the short sellers rush to cover their short positions when a stock starts to move up. For some short squeeze definitions, check out a previous short squeeze article.

Here is a list of biotech stocks with a very high short interest percentage.

Insys Therapeutics	INSY	60%
Tokai Pharmaceutic.	TKAI	57%
MannKind Corp	MNKD	48%
Myriad Genetics	MYGN	43%
OvaScience Inc	OVAS	36%
VIVUS, Inc.	VVUS	36%
Sarepta Therapeutics	SRPT	36%