Re:AMD Short Interest Has Grown by 234% in Nine Months Revea...
by 300bps on Saturday October 23, 2021 @12:48PM
(#28970139)
“Float” is the number of shares that a company has sold and are available to trade.
“Short Interest” is the number of shares that have been borrowed and sold into the market.
So having high short interest just means one or more people are betting the share price of AMD will go down so that they can profit.
Buying a stock (aka a long position) has a finite level of risk. If you buy 1 share for $100 your risk is limited to losing $100.
Selling a stock short (aka a short position) has infinite risk. For example, someone that sold 1 share of Amazon short in November of 1997 for $5 has lost over $10,000 factoring in Amazon’s current stock price and the splits the stock has had over the years.
When short interest is high the danger of a short squeeze is higher than usual. Picture what would happen if AMD stock price doubled. As everyone is buying the stock, short sellers would also be forced to buy the stock either to stop rampant losses or due to a margin call. This can make the price of a stock with high short interest rise dramatically.
“Short Interest” is the number of shares that have been borrowed and sold into the market.
So having high short interest just means one or more people are betting the share price of AMD will go down so that they can profit.
Buying a stock (aka a long position) has a finite level of risk. If you buy 1 share for $100 your risk is limited to losing $100.
Selling a stock short (aka a short position) has infinite risk. For example, someone that sold 1 share of Amazon short in November of 1997 for $5 has lost over $10,000 factoring in Amazon’s current stock price and the splits the stock has had over the years.
When short interest is high the danger of a short squeeze is higher than usual. Picture what would happen if AMD stock price doubled. As everyone is buying the stock, short sellers would also be forced to buy the stock either to stop rampant losses or due to a margin call. This can make the price of a stock with high short interest rise dramatically.
Good article on historic short squeezes:
https://www.ig.com/en/trading-strategies/what-were-the-bigge...