Read This Before Jumping on AMC Stock's Rally

The equity is more than 50% lower in 2022

Deputy Editor
Jun 28, 2022 at 12:24 PM
facebook twitter linkedin


While the shares of AMC Entertainment Holdings Inc (NYSE:AMC) have certainly fallen from the highs seen during the height of the meme stock craze, a small rally recently took place on the charts. In fact, in the last week, AMC managed to take on around 7%, breaking above pressure at the $13 level as a result. The recent pop may have helped the equity chip away at a more than 50% year-to-deficit, but its also pushed AMC right into its historically bearish 60-day moving average -- a trendline that's resulted in downside for the equity in the past. 

AMC Chart June 28

In a study conducted by Schaeffer's Senior Quantitative Analyst Rocky White, this signal occurred five other times during the past three years. One month later, the stock was lower 60% of the time, averaging a 12.1% drop. Some of this may already be in effect, as the equity was last seen down 4% to trade at $13.56 this afternoon.  

An unwinding of optimism could put additional pressure on AMC Entertainment stock. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AMC sports a 50-day call/put volume ratio of 2.58, which ranks higher than all of readings from the past 12 months. This is indicative of a healthier-than-usual preference for calls of late. 

Echoing this, the equity's Schaeffer's put/call volume ratio (SOIR) of 0.43 ranks higher than just 2% of readings from the past year. In other words, short-term options traders are much more put-biased than usual at the moment.

Speculating with options looks like the way to go, as premium can be had for a bargain. This is per the security's Schaeffer's Volatility Index (SVI) of 129%, which sits in the low, 25th percentile of its 12-month range, suggesting options traders are pricing in relatively low volatility expectations for the security at the moment. 

 

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

 
Schaeffer's Daily Bulletin Offer
 


 


 
Special Offers from Schaeffer's Trading Partners