SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : AOL, now I get it
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Jinping Shi who wrote (82)11/24/1996 5:33:00 PM
From: Allen L. Axelson   of 496
 
Jinping,

In addition to what Brian mentioned:

If you sell a stock short (say AOL at $28.00/share) and the
price goes above your sale price, you start to get worried.
If the price continues to go up, it will reach a point where
your broker will force you to cover the short if you do not
have enough cash/margin to cover the spread. This causes people
to have to buy the stock (to cover the earlier sale at a lower
price). This set of purchases puts further buying pressure on
the underlying stock thereby driving the stock up higher. This
action (the stock going up higher) causes even more people that
have shorted the stock to have to cover. As you can see - it feeds
itself into a fast rise in the stock price and is called
a "short squeeze". With as many shares shorted in AOL as there
are, it is possible to see this "short squeeze" occur. It's a
wonderfull thing to watch (if you are long) and a disaster (if you
are one of the people that shorted the stock).

al
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News