Which practice involves depositing securities with third parties to distort securities prices?

Which practice involves depositing securities with third parties to distort securities prices?

• A. Parking
• B. Capping/pegging
• C. Creating a squeeze
• D. Marking the close

Answer: (C)

Manipulating supply to push a price change is the idea behind this practice. By depositing securities with a third party, the trader reduces the amount of stock that’s readily available in the market. That creates a shortage of lendable or deliverable shares, which makes it harder for others—especially those with short positions—to borrow or cover. When shorts can’t obtain shares easily, they’re forced to buy back shares at higher prices, and this pressure can drive the price upward in a short squeeze. The act of moving or locking securities away to influence supply is what links this tactic to creating a squeeze—a deliberate effort to distort price by manipulating the availability of stock. Parking would simply move securities out of circulation, but not necessarily with the goal of triggering a squeeze. Capping/pegging focuses on keeping the price within a band, not on forcing a squeeze. Marking the close aims to influence the closing price specifically, rather than creating a broader squeeze through supply manipulation.

Manipulating supply to push a price change is the idea behind this practice. By depositing securities with a third party, the trader reduces the amount of stock that’s readily available in the market. That creates a shortage of lendable or deliverable shares, which makes it harder for others—especially those with short positions—to borrow or cover. When shorts can’t obtain shares easily, they’re forced to buy back shares at higher prices, and this pressure can drive the price upward in a short squeeze. The act of moving or locking securities away to influence supply is what links this tactic to creating a squeeze—a deliberate effort to distort price by manipulating the availability of stock.

Parking would simply move securities out of circulation, but not necessarily with the goal of triggering a squeeze. Capping/pegging focuses on keeping the price within a band, not on forcing a squeeze. Marking the close aims to influence the closing price specifically, rather than creating a broader squeeze through supply manipulation.