How Can a High IV Create a Short Squeeze in the Underlying Asset?

High Implied Volatility (IV) indicates high uncertainty and a large expected price move, which increases option premiums. If a trader is short the underlying asset (betting on a fall) and simultaneously short put options (selling protection), a sudden upward price move can trigger a short squeeze.

As the underlying price rises, the short puts become worthless, but the short position on the underlying incurs massive losses. This forces the short seller to cover their position by buying the asset, driving the price up further.