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Shares of Herbalife (HLF) are getting a bump in after hours trade on the back of comments made...
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Tuesday, January 15, 6:44 PM ETShares of Herbalife (HLF) are getting a bump in after hours trade on the back of comments made by trader Karen Fineman on CNBC's show Fast Money. Fineman suggested that it's possible that long holders like Dan Loeb could ignite a short squeeze by pulling their stock from margin. Shares +1% AH.
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The original shorts do the homework and put the trade on.
Then, every tom, dick and harry piles on.
The 'longs' get sick of hearing the touts from the shorts, so they pull their stock loans.
Huge buy-ins of the retail shorts results in a skyrocketing price. Easily a double. Sometimes a LOT more if it is a good corner.
The longs sell into the squeeze.
The original shorts were protected in a variety of ways during the buy ins.
The original idea makers make a tidy sum, as the stock goes to zero.
Of course, every situation is different. Sometimes it results in a standoff after all of the above. The longs won't sell; the shorts won't cover.