One technique that stock traders utilize is the short-squeeze play, which can generate huge profits in a short period of time. After several days of market drops, heavily shorted stocks could surge on any positive catalyst, especially as short-sellers scramble to cover their bearish positions.

On Nov. 12, Rev Shark wrote in a Real Money blog post called "Gloomy Morning Feels Routine" that "a little short squeeze isn't hard to generate."

The most commonly used ratio for measuring short-squeeze opportunities is the short ratio, which measures the number of days it would take the short-sellers to cover their position based on recent average daily volume.

Stockpickr has reviewed all the heavily shorted New York Stock Exchange stocks and developed a list of the top NYSE short-squeeze plays for the month of November.

One of the most heavily shorted NYSE stocks is Greenhill (GHL), the investment banker, with a short ratio of 31.2, which means that it would take more than 31 days for the short-sellers to cover their positions. On the Nov. 7 episode of "Fast Money," Guy Adami chose Greenhill as a Final Trade buy. The company just priced its secondary stock offering of 3.5 million common stock shares at $56 per share. The offering included 1.25 million of new common shares, and the rest were shares sold by managing directors.

Greenhill has a P/E of 26, far better than Morgan Stanley's (MS) P/E of 36 but above the industry average of 14. It has a yield of 3%, which is paid quarterly.

It is interesting to note that one of the owners of Greenhill is Al Gore, via his investment vehicle, Generation Investment Management. Gore co-founded GIM, which has more than $1 billion under management, with David Blood, a former executive of Goldman Sachs (GS). GIM also owns Johnson Controls (JCI), with a short ratio of 1.1; Aflac (AFL), with a ratio of 3.1; and Amdocs (DOX), which has a 1.3 ratio and just missed its earnings.

Hedge fund Tiger Global owns two of the 10 NYSE stocks with the highest short ratios: Polaris Industries (PII), with a short ratio of 15.6, and Simpson Manufacturing (SSD), with a ratio of 22.5.

Polaris, the ATV and snowmobile company, is rated hold by TSC Ratings. Last month, the company declared a regular quarterly dividend of 38 cents per share, giving the stock a 4.9% yield. The stock has a very favorable P/E of 7 and a very low PEG ratio of 0.78. Any PEG below 1 is considered a great buy based on expected earnings growth.

Simpson Manufacturing, the building products company, has experienced significant selling pressure, partially due to CEO Thomas Fitzmyers' selling 150,000 shares of his company's stock. Simpson has a P/E of 21, which is far higher than the industry average of 8. The PEG is a reasonable 1.35, although it'shigher than the industry average of 0.83.

For more ideas, check out the top NYSE short-squeeze plays portfolio at Stockpickr.com.

Posted on Nov. 13, 2008