Two Stocks That Could Bring Explosive Profits This Week

The hunting is looking really good this week, and I want to share a few of these names with everyone…

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Why "Super Squeeze" Situations Happen

Most folks, when they think a stock's going to go higher, up and buy the stock. When they get into trading, they may trade call options. On the other hand, when they think a stock is going to go down, most folks would think to buy put options and "go short."

Now, there's being "short," and then there's "short-selling" – that's something a lot of regular investors and traders just don't do very often because the risk is theoretically unlimited. It's typically a game for big institutional investors because of that risk; there can be steep margin requirements and/or really deep pockets required.

I'm going to oversimplify here, but basically, a short-seller will go out and borrow the stock in hopes that it will go down in price. When the time comes to "return" the shares, they pocket the difference as profit.

But like I said a second ago, short-sellers can find themselves in hot water. It's really easy for short-selling to go wrong in a hurry. Lately, big hedge funds have found themselves in deep trouble, as we saw with GameStop Corp. (NYSE: GME).

If there's significant, upward buying pressure on a stock, those short-sellers will have to "cover" their positions fast – they cover them by buying the stock, which drives the price up more, which forces other short-sellers to cover and buy, which drives the price up, which attracts other buyers with "FOMO," which drives the price up…

Everyone's got a different pain point, and not every short-seller will move to cover at the first sign of buying – some hedge funds covered their GameStop shorts at $90, others significantly higher – but sooner or later, when a "Super Squeeze" breaks out, they all cover and buy.

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