Kaylee Wells

Short squeezes start because investors bet on a stock doing poorly, also known as taking a short position.

Here's an example.

In this example, Paul Shea of Bates College will borrow a bunch of shares of Avis stock, sell them while they're overpriced, and then when the price falls, he'll buy them back up and return them to his lender.

Now, Avis was ripe for the picking because rental car companies have had a rough go recently, says Tyler Shipper with the University of St.

Thomas.

But when too many investors take that short position, it drives up the demand for the stock.

So the stock price climbs and climbs and climbs, making these investors' bets fail spectacularly.

Because the people who lent their stock to the investors say, hey, that stock's worth a lot now, so I want you to give it back.

But oh no, the investor sold it, remember?

Brett House at Columbia Business School says the short squeeze is when a whole bunch of the loners force that to happen at the same time.

Now all those people who wanted to buy the stock back when it was cheap have no choice but to buy it when it's rising.

Once the investors pay back all their borrowed shares, the price falls and the squeeze ends.

Angel Tengulov at University of Kansas says this happened recently with AMC and GameStop.

So even though it's been a tumultuous month for Avis, it could mean more money for the company in the long run.

I'm Kaylee Wells for Marketplace.

And I did it like a touchdown move.

Yay, I did it.

It's done.

It's a supply-demand equation.

So the reason that you see tip fees being much higher in northeast states is due to a lack of sufficient capacity.