Many retail investors who’ve made massive amounts of money during a short squeeze fully understand the real potential of what can happen in a relativity short amount of time.
Rumors of insane numbers for some of the popular stocks among retail investors such as AMC stock have shareholders dreaming of numbers out of this world.
The question remains though “How high could AMC stock reach in share price during a short squeeze?”
Due of the limited potential and limitless downside of short selling, it is dangerous for those partaking in short selling and we have seen this play out multiple times in the past.
If you short a stock at $10, it cannot go below zero, thus your profit on the deal is limited to $10 per share.
However, there is no cap on the stock. You can be required to purchase it again at $20, $200, or $2 million after selling it for $10. When short selling you are promising to buy back the shares at a future time and that means the price of the stock in the future is what the short sellers has to keep in mind.
A stock’s potential height is unbounded theoretically and although it is rare for such a squeeze to occur, it is still possible because of the mechanics of a short sale.