Quite frankly, you could lose everything on any individual bet.
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Today, I’ll show you how to find and profit from these short squeezes. But smaller squeezes happen all the time… Not all short squeezes go up that much, that fast. The price eventually fell… but not before short sellers got crushed.Īnyone who sold shares of VW on the way up made a killing. VW shares soared from 210 euros ($326) to 1,005 ($1,250) over the next two days-a 379% gain. They put in bids to buy shares no matter what the price so they could exit the trade. Passive index funds owned another 6%, and they couldn’t sell shares either.Ĭombined, they accounted for 100% of VW shares… So as soon as Porsche exercised its options, there would be no shares left for short sellers to buy to cover their positions. That was good news for Volkswagen…Īnother firm, Northern Saxony, held 20% of the company… It wasn’t selling.
On October 26, 2008, Porsche announced that it had bought enough stock and options to control 74% of Volkswagen’s shares. Instead, shares soared 379%… in just two days. (At the time, VW traded at 19 times earnings-twice that of its competitors.) In 2008, they had shorted 13% of Volkswagen (VW) shares… betting the stock would tank because it was too expensive. Short sellers smelled blood in the water…