Silicon Investor (SI) -- The First Internet Community

STOCKTALK

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 : DoubleClick Inc (DCLK) -- Ignore unavailable to you. Want to Upgrade?

To: David Lee who wrote (334)	7/2/1998 4:05:00 PM
From: Chip Anderson	Respond to of 2902

Here a simplistic explanation: When a stock price rises a certain amount above the price that a short paid for their position, their brokerage firm forces the short to "cover." Shorts cover by actually buying the shares that they borrowed when they opened their short position. It's basically a reverse margin call. If lots of shorts get caught when a stock rises quickly, they all must cover at the same time and that causes a huge surge in buying pressure forcing prices even higher (causing more shorts to cover, etc, etc.) Chip