Example of a Short Squeeze Trade

The speaker illustrates a trade that he placed, taking advantage of a short squeeze.  He looked for abnormal levels of short interest and then calculated a volume weighted average price to provide an approximation of what price the short sellers will start to lose.  He bought the stock as it started to break above this level and then added averaged up as it continued higher.  This trader bought call options as well in anticipation of a strong short covering rally. 

The trader did a good job of not getting too greedy; he scaled out of his long stock position in multiple order as it continued higher.  He was selling into strength which is essential for day traders to understand.