If you are on the short side of a stock trade of a stock that is heavily shorted, it can move against you very quickly. A stock can even rise on bad news. For example, a few days ago, Whirlpool (WHR) - Get Report jumped up by 2% after it reported earnings below analysts' estimates. As Jeff Macke said on CNBC's "Fast Money," "If you were short, you got lathered, rinsed and thrown in the dryer."
But there are plenty of long opportunities, too, with heavily shorted stocks. Keep your eyes out for short-squeeze opportunities, which can make you a quick profit. A short squeeze takes place when a stock's price rises on good news and the stock's short-sellers scramble to cover their bearish positions. This short-covering, in turn, can drive the price of the stock even higher.
The ratio for measuring a short-squeeze play is the short ratio, which represents the number of days it would take a stock's short-sellers to cover their positions, based on the stock's recent trading volume.
Stockpickr has reviewed the short interest on the stocks that trade on the
New York Stock Exchange
, and compiled a list of the
To read more,
Stockpickr is a wholly owned subsidiary of TheStreet.com.