SPDR S&P 500 (SPY)

[Perseverance71]

Yes but an average joe being forced to cover 100 shares of spy wouldn't be a squeeze. Yeah SPY could rally 3% and it could force someone like me to have to cover my position but that wouldn't make spy shoot up and make it a squeeze.

Average traders aren't working with enough money to make an instrument as large as spy squeeze. It's when a substantial percentage of total shares sold short are forced to be covered for a loss that makes a squeeze. SPY has 278 million shares short which has a dollar value of 52 billion. So that means it would take a whole group of financial institutions with billion dollar short positions to be forced to cover to make it a short squeeze. A big financial institution with a billion dollar short position is not going to be caught off guard by an intraday rally in SPY and be forced to cover their short for a loss. So it would take an extraordinary set of circumstances for there to be a short squeeze in SPY.