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

3 Short Squeeze Stocks with Upcoming Earnings Announcements

A short squeeze takes place when the short sellers rush to cover their short positions when a stock starts to move up. This gives traders some interesting opportunities. If a stock is heavily shorted, and there is any good news, it could really spike.One of the most common types of good news is earnings that beat analyst estimates.

Here are a few heavily stocks with coming earnings announcements. Pilgrim's Pride Corporation (PPC) has an incredible 60% of its float shorted. It has a short interest ratio of 16; this means that it would take 16 days for all the short sellers to cover their positions based on the current daily volume. The stock trades at 9 times trailing earnings and 11 times forward earnings. The company will be reporting around April 27 to May 1.

King Digital Entertainment (KING) has 26% of the float held currently short, with a days to cover ratio of 11. The stock has a current price to earnings ratio of 9 and forward PE of 8. It expects to report between May 5 an May 11.

One more stock that short sellers are all over is NeuStar, Inc. (NSR), with 57% shorted, and a short interest ratio also of 11. The stock trades at 9 times trailing earnings and 10 times forward earnings. The company will be making its earnings announcement between April 14 and April 20.

Hopefully you can make money on the long side with the right stock that has a big short position. If you like interesting stock lists like this, check out the many free stock lists at WallStreetNewsNetwork.com.

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

By Stockerblog.com

Make Money Buying Short Squeeze Stocks

One strategy that many stock traders utilize is purchasing short squeeze stocks. When a stock is shorted, it means that you anticipate profiting from a reduction in the price of a stock. What happens in the background is that you borrow shares of a company, sell those shares, then buy back those shares later at a what the traders expects is a lower price so that those shares can be paid back. You don't really see all the borrowing and replacement of the shares; it just appears in your account as a negative number of shares.

Short sellers often profit from this technique, but occasionally when the stock moves against them, the stock rises, and the short sellers rush to buy back shares to cover their position, creating what is referred to as a short squeeze. When this happens, the stock can increase in value very quickly. Positive news can cause the short squeeze to take place.

Stock traders profit from this situation by finding stocks that could 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 -A very important metric. 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 the number of short sellers from the previous month.

So here are some stocks that are heavily shorted.

GoPro (GPRO), the sports camera company, is a heavily shorted stock, with over 60% of the stock's float currently held short.

Pilgrims Pride Corporation (PPC) is also heavily shorted, with 58% of the float held short. In addition, the Short Interest Ratio is 19.7. This means that the approximate number of days to cover the position is 20 days, based on the current daily volume.

ITT Educational Services (ESI) has a short interest of 47%, and a days to cover ratio of 31.9. GameStop (GME) has 44% of the float shorted, with a short interest ratio of 42.3.

For other stock ideas, check out the stock lists at WallStreetNewsNetwork.com.

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

By Stockerblog.com