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I don't think there's an exogenous time limit. If the price goes up enough, your broker starts worrying that you won't be able to buy the stock in future. They
by dash2 6y ago
I don't think there's an exogenous time limit. If the price goes up enough, your broker starts worrying that you won't be able to buy the stock in future. They then might force you to buy now, which pushes the price up further. Hence the squeeze. (Source: learning about this for about a week, completely ignorant, correct me if I'm wrong.)
- dmurray 6y agoThey don't necessarily force you to buy it back now, but they ask you to deposit more money to cover your "on-paper" losses. The broker usually has some discretion in when to do this, but there are also regulations for how far they can let it go. The shorts collectively have losses on paper of $35bn+, which is a lot of money even for well-capitalized Wall Street funds.