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(FINANCE) when a trader in a short position is wrong about the price movement, and is consequently forced to buy the asset at the higher price in order to meet legal obligations.

The classic example of this is the broker who sells stocks he does not own, in the expectation that he can buy the stock in the future at a lower price for delivery. If the price goes up instead of down, the broker must "cover his shorts," and very possibly drive prices higher still.
When Morgan was ready to squeeze the shorts, he was damn certain his corner would hold as the Twombly men scrambled to buy shares at any price.

"I've got your short cover right here, Gentlemen," he snorted from his seat overlooking the trading pit.
by Abu Yahya April 15, 2010
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