What is a short squeeze? Understanding why they happen and how they work

A short squeeze afflicts short-sellers, investors who have sold stocks they don't actually own, in hopes of buying them back later for less money. If the stock rises instead, the strategy goes awry.
Caroline Purser/Getty
A short squeeze is when a shorted stock's price rises and sellers close their position to avoid a loss.
Signs of a short squeeze include frequent buying of a high number of shares being sold short.
Buy-limit orders and hedging strategies offer short-sellers some protection agai