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. 

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Schaeffer's Investment Research Stock Pick Report
 


 


 
Special Offers from Schaeffer's Trading Partners