" Someone holding IOC common last year lost money"
That is if one didn't sell options, (both the calls and puts) buy more in the $50's and sell some stock above $80, then it was a great year (for me).
Don't assume that all 6.4 million shares that are short are hedged. There are always a fair number of individuals that try to pile on to a short position thinking that the professionals know something. I recently had a conversation with investor and I mentioned my great success over the past 2 years and my biggest winner DNDN. He said don't even mention DNDN he lost a fortune because he said his broker told him he had information from an NYU doctor that said the drug would never be approved. He covered at $16 and has won a FINRA arbitration against the broker, but he still lost substantial money.
One of the largest shorts in DNDN for many years was SAC Capital. They ended up covering on the first pop, going long and ended up with over 8% of the shares on FDA approval. Most individuals would not be so quick to cover and reverse their position. So again the individual can be left holding the bag, even with shorts.
There has been a little short interest covering, but not much. The percentage of shares short vs. the float is starting to get ridiculous as is the days to cover, considering the very moderate volume of late. The "big lie" claims of no gas look stupid when one looks at XOM going full throttle on PNG building a LNG plant.
Even "professional" shorts lose money sometimes. (Just ask Whitney @ $30). Everyone seems complacent to wait for the second quarter 2011, but what is something big happens before? I suspect a lot of short will be caught off guard.