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Top Financial Short-Squeeze Plays

These heavily shorted financial stocks could surge higher on any positive news.

Updated from 11:10 a.m. EDT

According to Jim Cramer, we're seeing the

flip side of a turn in housing

. "There's been so much stock bought back, and this administration doesn't like naked shorting," he wrote in an April 17 post to his


blog, "so you have a real chance to see multiple expansion


a short squeeze."

A short squeeze occurs when short-sellers quickly buy in shares of a stock in order to cover their bearish positions, driving the price of stocks up sharply. The ratio for measuring short-squeeze opportunities is the short ratio, which is the number of days it would take the short-sellers to cover their positions based on recent average daily volume.

Especially during earnings season, it's a good idea to keep an eye on which stocks are being heavily shorted and could surge higher on a surprise earnings beat. With that in mind, stocks reporting earnings on Wednesday include



, which has a short ratio of 2.5;



, with a short ratio of 1.8;



, with a short ratio of 3.6; and

Yum! Brands


, which has a short ratio of 2.3. Tomorrow sees reports from



, with a 2.8 short ratio;

Fifth Third


, which has a short ratio of 1.4;



, which a short ratio of 1.4; and



, which an 8.8 short ratio.

One of the most heavily shorted sectors is the financial sector, which is certainly creating some interesting potential short-squeeze plays.

Stockpickr has compiled a portfolio of the

top financial short-squeeze plays

, all of which have market caps of more than $500 million.

To read more,



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