Just when you thought we’d returned to some semblance of normal"Meme stocks"are back. Instead of GameStop (GME), this time is the AMC Entertainment Holdings Inc (NYSE: AMC) Leader, the stock last rose 38% at $ 44.35 and earlier traded at a new record high of $ 49.40. Reddit stock short sellers were dealt a devastating blow over the weekend after AMC raised more than $ 230 million to sell shares to Mudrick Capital, which apparently immediately sold those stocks for a profit.
The cinema chain is capitalizing on the social media-driven trading frenzy, launching an initiative to communicate with small investors and enticing them with free popcorn and exclusive screenings as a reward for their commitment. Amid this renewed popularity, options traders are coming out in droves.
More specifically, 1.3 million calls have crossed the band today, a volume four times the average intraday amount and twice the number of puts traded. The most popular is the June 40 call, but it seems some too Put spreadActivities that occur during the June 30th and 31st puts.
Some notes on AMC that are not usually covered by the mainstream outlets. First, the stock’s 14-day Relative Strength Index (RSI) is currently at a ridiculous 93.6 at a level of "overbought" that mimics the initial Wall Street bet madness from the end of January. At the same time, a whopping 181% of AMC’s total available float is being sold short. So while there is still plenty of room for an ongoing short squeeze, investors should carefully watch this RSI if they want to get in on the Reddit fun.
Finally, the securitiesSchaeffer’s Volatility Scorecard(SVS) ranks 74 out of a possible 100, which means the stock tends to exceed those volatility expectations – a boon for option buyers.