Short Squeeze Calculator

Calculate Potential Profit from a Short Squeeze





Formula

The formula to calculate the Potential Profit (PP) from a short squeeze is:

\[ \text{PP} = (\text{NS} \times \text{CP}) - (\text{NS} \times \text{SP}) \]

Where:

What is a Short Squeeze?

A short squeeze is a rapid increase in the price of a stock primarily due to technical factors in the market rather than underlying fundamentals. It occurs when a stock or other asset jumps sharply higher, forcing traders who had bet that its price would fall, to buy it in order to forestall even greater losses. Their scramble to buy only adds to the upward pressure on the stock’s price.

Example Calculation

Let's assume the following values:

Using the formula:

\[ \text{PP} = (100 \times 150) - (100 \times 100) = 15000 - 10000 = 5000 \]

The Potential Profit (PP) is $5000.