Shares of Sun Valley-based Flamemaster Corp. surged for the second time in two weeks, rising as much as 42 percent in one day due to what the company’s chief executive described as short covering.

By the end of trading Dec. 29, Flamemaster shares had settled down to a 1.9 percent loss, to $55.30 a share, after climbing as high as $80.

Flamemaster Chief Executive Joseph Mazin said the activity was a result of short-selling that took place after the company’s planned 7-for-1 stock split was announced on Dec. 14. On that day, 84,420 shares traded hands average daily volume is normally just 1,600 shares and the stock price leaped $21.20 to $54.20.

“Over a three-day period, over 70 percent of outstanding shares traded,” Mazin said. “So, a short position developed to accommodate for the increased volume. Of course, this is speculation on my part.”

Short selling is a way for investors to profit from the falling price of a stock. Investors borrow the security from a broker and sell it, with the understanding that they must buy shares later hopefully at a lower price to return to the broker. But when the stock price doesn’t go down, as Flamemaster’s hasn’t, investors are forced to buy the stock back at a higher price to close out, or “cover,” their losing bets.

“Why it’s happening today, I’m not exactly sure,” said Mazin. “There is a ‘due bill’ coming up.”

Flamemaster’s stock split was an effort to comply with the minimum requirement for 500,000 publicly held shares to avoid being delisted by the Nasdaq SmallCap Market. The company plans to use the additional stock in its previously announced merger with Best Candy & Tobacco Co., a Phoenix-based distributor to convenience stores and casinos.