BALTIMORE (Stockpickr) -- The last couple of years have been a major recovery story for financial stocks, which have taken more than a little heat in recent years for their involvement in the market crash of 2008. While financials were the worst place to put your money as the market collapsed, many have become a relatively safe investment now. How did that turnaround happen?That their hands were forced had a lot to do with it. As risky financial instruments soured, investors cashed out, and defaults hit record highs -- and financial firms had to shore up their balance sheets quickly to placate investors and stay solvent. Now, with reworked asset bases, these stocks are offering investors stronger businesses, many times at a discount to reasonable valuations. That hasn't stopped some investors from targeting financial stocks. Right now, some of the most interesting financial plays on the market have major bets against them, which could be creating an ideal short-squeeze opportunity right now. A short squeeze is the buying frenzy that ensues when a heavily shorted stock starts to look attractive again to investors, causing short-sellers to cover their positions -- and share price to skyrocket. One of the best indicators of just how high a short-squeezed stock could go is the short interest ratio, which divides shares short by average daily trading volume in order to get a ballpark estimate of the number of days it would take for short-sellers to cover their positions. The higher the short ratio, the higher the potential profits when the shorts get squeezed. Here's a look at a handful of financial plays that have the potential to see a short squeeze in the mid-term.
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