Simple explanation. Look up "float". That's the number of shares Available to trade. Only the float, not all the other shares that show up on financials. Let's say the XYZ Corp "float" is 1 million shares, period. Of that, perhaps 90% is owned by institutional investors. That leaves 100k "in play" in the market. Of "those" perhaps 20k are Really in play, the rest just sitting there doing nothing.
Short sellers come along and "borrow" 20k shares to sell. They pocket that money immediately and count on the price going down to "finish" the transaction. This is called the "clearing" or clearinghouse. LOTS of clearinghouse entities are very "casual" about "finishing" the transaction. Short sellers take advantage of this by "borrowing" additional 20k shares. In fact, and this is documented by Patrick Byrne on his website, there are companies who have more shares "short" than they've got shares OUTSTANDING! In XYZ example, more than a million shares shorted, and they don't own a one. That's a squeeze play. But remember they claim we're the crooks!
Simple explanation. Look up "float". That's the number of shares Available to trade. Only the float, not all the other shares that show up on financials. Let's say the XYZ Corp "float" is 1 million shares, period. Of that, perhaps 90% is owned by institutional investors. That leaves 100k "in play" in the market. Of "those" perhaps 20k are Really in play, the rest just sitting there doing nothing.
Short sellers come along and "borrow" 20k shares to sell. They pocket that money immediately and count on the price going down to "finish" the transaction. This is called the "clearing" or clearinghouse. LOTS of clearinghouse entities are very "casual" about "finishing" the transaction. Short sellers take advantage of this by "borrowing" additional 20k shares. In fact, and this is documented by Patrick Byrne on his website, there are companies who have more shares "short" than they've got shares OUTSTANDING! In XYZ example, more than a million shares shorted, and they don't own a one. That's a squeeze play. But remember they claim we're the crooks!