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Biotech / Medical : Vivus, Why the Slide?
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To: SteveG who wrote (3709)9/22/1997 1:03:00 AM
From: DDS-OMS   of 3991
 
Steve G.

<As you point out, in the case of a squeeze, there is actually a (temporary) pool of 30MM public shares from which the short sellers can make their purchases. And each short share covered then reduces the temporary float by that share.>

This reduction in the "temporary float" is what makes a short squeeze happen. As more and more short postions are covered--each one reduces the float--more and more buyers chasing fewer and fewer shares. The shorts actually do it to themselves as panic sets in, driving the price higher and higher--till this demand is satiated--then a collapse of the share price occurs. Look at a chart of ZITL from 12/19 to 12/30 for a classic squeeze, culminating in a 42 5/8 intraday swing.

Regards,
Gary
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