This Short-Squeeze Candidate Could Actually Pan Out in the Long Run
Aside from selling a stock for a higher price than you bought it for or collecting dividend payouts, one way investors make money from stocks is through options. Stock options give investors the right to buy or sell a stock at a predetermined price and date. Call options are a bet that a stock's price will rise, and put options are a bet that a stock's price will decline.
Like put options, short selling is a way to profit from a stock's decline. When an investor shorts a stock, they essentially borrow shares at a given price and sell them immediately, with the thought that the price will drop and they can repurchase those shares later for less money and profit the difference.
For example, if you borrow 100 shares of a company while the stock price is $50, you can sell them for $5,000. If the price drops to $40, you can purchase those same 100 shares back for $4,000, return them, and pocket the $1,000 difference. A short squeeze occurs when a shorted stock's price rises and investors rush to buy back the borrowed shares before the price increases even more. Since this increases demand, the stock's price inevitably rises, creating a cycle.
Source Fool.com