Can somebody explain a short squeeze to me as if I have never traded anything?

Start with short selling, using something that is not a share.

You believe the price of a particular bicycle will fall. So you borrow a bicycle from a friend, promising to return an identical one later. You immediately sell it for 100. If the price falls to 60, you buy one for 60, return it, and keep 40.

That is short selling: borrow, sell now, buy back later, return, pocket the difference.

Now notice the asymmetry, which is the whole story. If you buy something for 100 the worst case is that it becomes worthless and you lose 100. If you short something at 100 and the price rises to 500, you must still buy one to return — and your loss is 400. There is no ceiling on how high a price can go, so losses on a short position are unlimited while losses on an ordinary purchase are capped.

Everything else follows from that.

The part that makes these episodes extreme rather than merely notable is usually that more shares were shorted than actually exist as freely tradeable stock.

That sounds impossible and it is not: a borrowed share can be sold to someone who lends it again, so the same underlying share can be shorted more than once. When the total short interest exceeds the shares readily available to buy, closing all those positions requires buying more shares than are for sale.

At that point the price is set by whoever is willing to sell, and if very few are willing, it can go anywhere.

The other ingredient in some episodes is options, which add a second forced-buying loop as the parties who sold the options hedge their exposure. That is a longer explanation, and the shape is the same: automatic buying that is not about anybody's opinion of the company.

Now the squeeze itself, and why waiting is not always possible.

A short seller has borrowed something. The lender can ask for it back. And because the position can lose more than the account holds, the broker requires collateral, and demands more as the price rises. When the price climbs, the short seller faces a choice: post more money, or close the position by buying.

Here is the mechanism. Buying to close a short is a purchase like any other, and purchases push the price up. So a rising price forces short sellers to buy, and their buying pushes the price higher, which forces more of them to buy.

That feedback loop is the squeeze. It is not driven by anyone's view of the company's value — it is forced buying by people trying to limit losses, and it can carry the price far above anything justifiable while it runs.

The answer to "why can they not wait" is: because they may be required to post collateral they do not have, or the borrowed shares may be recalled. Being right eventually is no help if you are closed out first.

Worth adding the ending, since it is the part that gets less attention than the rise.

These episodes end when the forced buying is exhausted. After that the price is left with no support from the mechanism that drove it, and it typically falls a long way — often to somewhere near where it started, sometimes lower.

So the people who lose most are not only the short sellers. They are also whoever bought near the top on the assumption that the rise reflected something durable. Nothing in the mechanism above says anything at all about what the business is worth, and that is precisely the trap.