• Short covering is closing a short position by buying back shares that were originally borrowed to sell short using buy orders to cover the orders.

  • Short covering can result in either a profit (if the asset is bought back lower than where it was sold) or a loss (if it is higher).
  • Covering a short position can be forced if a short squeeze occurs and sellers become the target of a margin call. Short-term interest rates can help predict the chances of a squeeze.