The theory that a stock with many short positions taken in it will rise, because these positions must be covered by the stock.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
In investing, a theory stating that a stock on which there are a large number of short positions will eventually rise in price as investors move to cover the short positions. That is, a stock that many investors have sold over a period of time eventually has upward pressure build as buyers move to buy the shares being sold, creating demand. See also: Short selling.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
The theory that holds that a large short position in a stock will eventually exert upward pressure on the stock's price as investors purchase the stock to cover their short positions. The rise in the price of a stock that has been the object of substantial short selling will become more rapid as investors cover short positions to stem losses.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.