Short Squeeze Calculator

Reviewed By: Scott Hickam (MBA, Finance)

Use the tabs in the calculator to model a short-covering (squeeze) scenario, calculate Days to Cover, estimate a simplified squeeze score, and estimate borrow cost/breakeven for a short position.

Squeeze Scenario

Days to Cover

Squeeze Score

Short Cost/Breakeven

Model a short-covering scenario and estimate potential price impact.

Current Price ($)Float (shares)

Short Interest (shares)

Short Interest (% of float)

Average Daily Volume (shares)

% of Shorts Forced to Cover

Covering Window (days)

Price Impact per 1% Float Demand

Borrow Rate APR (%)

Days to Cover

Extra Demand/Day (shares)

Demand/Day (% of float)

Impact/Day (%)

Projected Peak Price ($)

Total Est. Increase (%)

Educational use only. Estimates are simplified and not investment advice.

Short Squeeze (Short Position P&L) Formula

The following formula is used to estimate the profit or loss on a short position. During a short squeeze (when price rises), this value is typically negative (a loss for the short seller).

PP = NS \times (SP - CP)

Variables:

PP is the potential profit/loss (P&L) on the short position
NS is the number of shares shorted
SP is the short sale (entry) price per share
CP is the current (or cover) price per share

To calculate the potential profit/loss on a short position, multiply the number of shares shorted by the short sale (entry) price per share. Then multiply the number of shares shorted by the current (or cover) price per share. Subtract the second result from the first. A positive result indicates a profit (price fell), and a negative result indicates a loss (price rose, as in a short squeeze).

What is a Short Squeeze?

A short squeeze is a rapid increase in the price of a stock that is often driven by market mechanics (for example, short sellers buying to cover) rather than changes in a company’s underlying fundamentals. It occurs when a stock or other asset jumps sharply higher, forcing traders who had bet that its price would fall to buy it to limit further losses. Their buying can add to the upward pressure on the stock’s price.

How to Calculate Short Squeeze P&L?

The following steps outline how to calculate the short position profit/loss using the given formula:

First, determine the number of shares shorted (NS).
Next, determine the short sale (entry) price per share (SP).
Next, determine the current (or cover) price per share (CP).
Next, insert the values into the formula: PP = NS × (SP − CP).
Finally, calculate the potential profit/loss (PP).

Example Problem:

Use the following variables as an example problem to test your knowledge:

Number of shares shorted (NS) = 100

Current price per share (CP) = $10

Short sale (entry) price per share (SP) = $8

PP = 100 × (8 − 10) = −$200, which is a $200 loss for the short seller.