Shares of AMC Entertainment have reached a second milestone in as many weeks, surpassing the USD 40 level after more than doubling to USD 30 a week ago. Mudrick Capital just bought 8.5 million shares of AMC only to turn around, deem them “overvalued” and dump them right after, according to the latest reports. Investors are piling in the stock anyway, sending a signal to the investment firm that its muscle isn’t needed.
The Wall Street Bets forum on Reddit, which is responsible for rallying individual investors around AMC and other highly shorted stocks in a move to upend sophisticated traders, is filled with members celebrating and spreading their share of FOMO. They are urging each other to get in before the price goes to USD 100. Considering the stock is already up 2,000% this year, that would be an amazing run-up though it’s unclear how sustainable that would be. The nearest precedent is GameStop, whose shares have advanced roughly 1,400% YTD thanks to the same WallStreetBets effect.
Meanwhile, Market Rebellion, which is run by brother traders Jon and Pete Najarian, tweeted that there was some “bearish” and “unusual activity” in AMC stock, with “7,000 June USD 31 puts bought in one print for USD 5.55 above open interest of 1,313 contracts.” Either that options trader knows something that the market doesn’t or they are about to fuel more gains in the stock. Bearish moves like this seem to unite the meme-stock crowd even more, which continues to ride the AMC wave for all its worth. So far, there are 1.35 million AMC contracts traded, 64% of which are calls and the balance of which are puts, according to Roensch Capital, which the firm described as “bull heavy.”
On the flip side, call prices in Blackberry, another stock that Reddit members on the WallStreetBets platform are targeting, are on the rise today. Last Friday, Market Rebellion found that “5,000 weekly USD 10 calls expiring this Friday, Jun. 4, were bought for USD 0.11 to USD 0.31 above open interest of just 1,152 contracts with shares at USD 8.77.” Now those calls are trying higher by USD 3.25, more than 10x the purchase price, while the stock is up 10%.
WallStreetBets is getting expensive for some short-sellers to tango with.
For a look at all of today’s economic events, check out our economic calendar.