Core terms
Short squeeze
A rapid price rise in which short sellers buying to close their positions add to the buying pressure. The label is often applied after the fact and is hard to establish from price alone.
A short seller who is losing money on a rising stock may have to buy back shares, voluntarily or because a broker issues a margin call or recalls the borrowed shares. Those purchases add to demand. That is the mechanism the term describes.
Establishing it needs more than a big move. The SEC staff report on the January 2021 trading in GameStop found that buying to cover short positions was a small part of overall buy volume, and that most buying came from other buyers. Short interest is reported only twice a month, so it shows positions with a delay.
What traders should verify
Before calling a move a squeeze, check short interest and its date, borrow availability and cost, and any filing that explains the move. Without that, describe it as a sharp rise.
Do not conflate
No official definition. "Squeeze" is common in promotional posts; it is a claim about who is buying, which price data alone cannot show.