Options Traders Hammer AMC Stock Calls Amid Post-Earnings Pull Back

AMC Entertainment Holdings Inc AMC gapped up Tuesday morning after printing a second-quarter earnings beat, but slammed into resistance at the 21-day exponential moving average and sold off over 8%.

The Reddit darling has squeezed shorts twice already this year but that didn’t deter Jim Chanos from appearing Tuesdaay on CNBC's "Squawk Box” to blast AMC apes and announce he had taken a short position in the stock.

Chanos, president and founder of short-selling focused investment firm Kynikos Associates, noted AMC’s fundamentals as his reason for taking a position in put contracts and said box office numbers are down 50% to 70% from 2019 levels partly due to movie studios releasing blockbuster films on streaming services.

The apes and droves of other retail investors aren’t focused on AMC’s profitability, or lack thereof, and believe AMC is still the target of naked shorting. AMC also has 15.95% of its shares legally held short with 23.56% of its total float held by institutions — numbers which are considered high.

Although a number of put sweeps were purchased on AMC Tuesday, the majority of institutions continued to hammer bullish call contracts. Together they purchased more than $1.3 million with one institution choosing a strike price of a whopping $145 expiring Jan. 21, 2022.

The trades below include only those with a total purchase price of over $50,000.

See Also: How to Buy AMC Stock Right Now

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays the market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The AMC Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 9:39 a.m., a trader executed a call sweep near the ask of 305 AMC Entertainment options with a strike price of $36 expiring on Aug. 13. The trade represented a $75,030 bullish bet for which the trader paid $2.46 per option contract.
• At 9:40 a.m., a trader executed a call sweep near the ask of 207 AMC Entertainment options with a strike price of $145 expiring on Jan. 21, 2022. The trade represented a $62,100 bullish bet for which the trader paid $3 per option contract.
• At 9:48 a.m., a trader executed a call sweep near the ask of 342 AMC Entertainment options with a strike price of $37 expiring on Aug. 13. The trade represented a $79,686 bullish bet for which the trader paid $2.33 per option contract.
• At 10:02 a.m., a trader executed a call sweep near the ask of 200 AMC Entertainment options with a strike price of $80 expiring on Dec. 17. The trade represented a $95,000 bullish bet for which the trader paid $4.75 per option contract.
• At 10:05 a.m., a trader executed a call sweep at the ask of 200 AMC Entertainment options with a strike price of $80 expiring on Jan. 21, 2022. The trade represented a $115,000 bullish bet for which the trader paid $5.75 per option contract.
• At 10:18 a.m., a trader executed a call sweep near the ask of 1,436 AMC Entertainment options with a strike price of $41 expiring on Aug. 13. The trade represented a $107,700 bullish bet for which the trader paid 75 cents per option contract.
• At 11:18 a.m., a trader executed a call sweep near the ask of 410 AMC Entertainment options with a strike price of $40 expiring on Aug. 20. The trade represented a $63,140 bullish bet for which the trader paid $1.54 per option contract.
• At 11:23 a.m., a trader executed a call sweep near the ask of 401 AMC Entertainment options with a strike price of $34 expiring on Aug. 13. The trade represented a $90,626 bullish bet for which the trader paid $2.26 per option contract.
• At 11:46 a.m., a trader executed a call sweep near the ask of 374 AMC Entertainment options with a strike price of $35 expiring on Aug. 13. The trade represented a $58,718 bullish bet for which the trader paid $1.57 per option contract.
• At 12:28 p.m., a trader executed a call sweep near the midpoint of 342 AMC Entertainment options with a strike price of $35 expiring on Aug. 20. The trade represented a $106,020 bullish bet for which the trader paid $3.10 per option contract.
• At 12:34 a.m., a trader executed a call sweep near the ask of 793 AMC Entertainment options with a strike price of $120 expiring on Dec. 17. The trade represented a $190,320 bullish bet for which the trader paid $2.40 per option contract.
• At 12:34 a.m., a trader executed a call sweep near the ask of 1,274 AMC Entertainment options with a strike price of $120 expiring on Dec. 17. The trade represented a $303,212 bullish bet for which the trader paid $2.38 per option contract.

AMC Price Action: Shares of AMC Entertainment were trading down 5.74% at $31.86 on Tuesday afternoon at publication.