Short Squeezes: Everything You Need to Know About the Recent Investing Movement

Have you noticed something strange going on in certain stocks recently? Take GameStop. Not only has the stock more than quadrupled in January alone, but on Monday, Jan. 25, GameStop opened about 50% higher than its Friday closing price and briefly rose by more than 115% before sharply retreating to close up by "only" 18%.

Obviously, this level of volatility is highly unusual. The recent price action in GameStop and several other stocks can be attributed to a phenomenon known as a short squeeze. Here's a closer look at what that means, how it works, and why it can cause massive spikes in stock prices like we've seen this week.

Image source: Getty Images.

Source Fool.com