AMC stocks brace for more volatility as options trading intensifies
AMC Entertainment (AMC) – Get a report was moderately higher on Monday ahead of what is expected to be another volatile week of trading in the movie-theater-turned-stock-poster-child chain as Wall Street traders make bets against another massive rally of investors Retail.
AMC shares rose 2.57% in pre-market trading after Reuters reported that traders and investors on Wall Street are making bets in the options market that would limit losses if retail traders continue their trading. collective efforts to push AMC stocks and other memes stocks up.
A Reuters analysis of options data and interviews with market participants, including a Wall Street banker and a fund manager with $ 30 billion in assets, showed some institutional investors have stepped up options trading complexes that allow them to bet that stocks will fall.
The so-called sell-down spread, a common bearish options strategy among investors and more sophisticated Wall Street traders that also limits profits, comes as AMC continues to post breathtaking gains in the midst of ‘a buying frenzy by less sophisticated retail investors motivated by little more than the promise that stocks will rise in value.
Indeed, AMC has taken the spotlight on the meme stock held at one point by video game retailer GameStop. (GME) – Get a report, which became a household name in January when its shares soared amid discussions among retail investors on message boards like Reddit to bid higher.
In the case of the downward spread, its increased use now, which has not been reported before, shows how Wall Street is looking for ways to profit from the unprecedented rise in retailing, but is moving ahead cautiously after some prominent funds were shaken. earlier this year.
On the verge of bankruptcy just a few months ago, AMC is now the darling of retail traders, with this year’s 2,200% gain ranking among the top stocks on the Russell 3000 Index. of the title enabled the company to sell shares and consolidate its precarious balance sheet.
AMC shares ended the trading day on Friday down nearly 7% even as CEO Adam Aron argued for another fundraiser that many see as dilution of shares.
Aron himself replied to this, noting that the additional 12 million shares that AMC seeks to sell “… is not a senseless dilution” but rather a “… very smart fundraiser so that we can develop this company â.
Meanwhile, Meme’s grandfather GameStop is expected to report a quarterly loss of 70 cents a share on sales of $ 1.2 billion when it releases its results on Wednesday. GameStop shares rose 1.29% in pre-market trading.