Which of the following statements is/are correct with reference to the Short squeeze?

A. It is a term used by market participants to refer to a phenomenon where short sellers in a stock who have placed their bets on a stock’s fall, rush to hedge their positions or buy the stock in the event of an adverse price movement, in order to cover their losses.

B. It leads to a dramatic rise in share price, far beyond its fundamentals.

C. Both A & B

D. None of these

Explanation:

There are dozens of ways to pick stocks, but few have been as unconventional – or as successful – as the coordinated short-squeeze being deployed by Reddit’s army of day traders. Now, Wall Street is scanning for which of the market’s most-hated shares could be targeted next. Short squeeze is a term used by market participants to refer to a phenomenon where short sellers in a stock who have placed their bets on a stock’s fall, rush to hedge their positions or buy the stock in the event of an adverse price movement, in order to cover their losses. It leads to a dramatic rise in share price, far beyond its fundamentals.