Wall Street Continues To Bet Against AMC Stock But Looks Beyond Short Selling: Report

Wall Street traders are turning to a complex bearish options strategy in order to bet against shares of AMC Entertainment Holdings Inc AMC and other stonks or shares popular with retail investors, Reuters reported Monday.
What Happened: “Bear put spread” is a strategy where an investor purchases a long put with a higher strike price and another short put with a lower strike price. Maximum profit using this strategy is equivalent to the difference between two strike prices minus the net costs associated with the options.

Options trading data from Trade Alert, analyzed by Reuters, indicates that complex trades which deploy strategies such as “put spreads” are on the rise. 

These trades usually made by professional investors accounted for 22% of daily AMC trades on average this week compared with 13% for the month of May.

See Also: How to Buy AMC (AMC) Stock

However, the majority of options trades were still made by retail investors as only about 10% to 15% of overall daily AMC options volume this week was traded in blocks larger than 100 contracts, which purportedly is a size linked with professional investors.

Why It Matters: In the past week AMC shares have risen 83.4%; the stock has skyrocketed 2,160% on a year-to-date basis. 

Other stonks such as GameStop Corp GME and BlackBerry Ltd BB have run up 11.87% and 32.67%, respectively, in the same time period.

Last week, AMC and GameStop short-seller losses swelled up to $12 billion on a year-to-date basis.

See Also: AMC Dizzying Rally On Wednesday Took Company's Valuation Rocketing Past Rival Stonk GameStop

In AMC alone, YTD losses of short sellers rose up to $5.22 billion on a mark-to-market basis.

Heading into a fresh week of trading, BlackBerry and AMC remain the most discussed names on r/WallStreetBets, the Reddit forum known for carrying out short squeezes.

Price Action: On Friday, AMC shares closed nearly 6.7% lower at $47.91 and fell another 8.7% in the after-hours session to $43.74.

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