What did Volkswagen squeeze to in 2008?
On 28 October 2008, the price of Volkswagen common shares exceeded €1,000. The case aims to explain this apparent market distortion using rational arguments such as the tentative takeover of Volkswagen by Porsche and the role of derivatives, particularly delta hedging. How much did VW stock gain during the 2008 short squeeze? Between 24 and 28 October 2008, Volkswagen’s share price more than doubled. During intraday trading on 28 October, it reached €1,005 — an increase of around 377% from the previous week’s close of €210.
What is the biggest short squeeze in history?
One of the most dramatic short squeezes occurred with Volkswagen in 2008, when the company briefly became the world’s most valuable by market capitalization. A series of events, including Porsche’s unexpected announcement that it had increased its stake in Volkswagen, led to a panic among short sellers. In 2008, Volkswagen quietly became the most valuable company on Earth.
How long do short squeezes last?
The higher the days to cover, the more volatile a stock during a squeeze. For example, if a stock has a short interest of 100 million shares and trades 2 million shares a day, then it would take 50 days to close the short position. In contrast, a normal stock might have days to cover of less than 10. Measuring a potential short squeeze can involve a metric called the short interest ratio, a. It indicates, in days, how long it would take to cover or buy back all the shorted shares. Basically, you divide the number of shares sold short by the average daily trading volume.