AMC Stock Sees Silver Lining in Amazon Buzz

Amazon.com is reportedly eyeing the movie theater name

Jake Scott
May 11, 2020 at 2:18 PM
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The shares of AMC Entertainment Holdings Inc (NYSE:AMC) are soaring, up 40% to trade at $5.69, the top performer on the New York Stock Exchange (NYSE) today. This comes amid reports that Amazon.com (AMZN) is considering buying what is currently the world's largest cinema chain, although it is unclear if talks are ongoing. The cinema company had been in discussions about Chapter 11 bankruptcy filing. 

During the broad market selloff in March, AMC hit an all-time-low of $1.95, a level the equity reached once again in mid April. Now up over 120% in the last month, AMC stock is seeing today's rally run out of steam below its 120-day moving average-- a trendline that hasn't been conquered on a closing basis in roughly a year.

AMC Chart May 11

Meanwhile, sentiment is unenthusiastic surrounding AMC stock to say the least. All 11 analysts in coverage sporting a "hold" or worse. Echoing this is the 12-month consensus target price of $3.20 is a staggering 44.3% discount to current levels. 

There is also plenty of pent-up pessimism surrounding the stock in the options pits. The equity’s Schaeffer’s put/call open interest ratio (SOIR) of 1.58 sits higher than 92% of all readings from the past 12 months.

Whatever the motive, now is a perfect time to speculate on AMC's next move with options. The stock’s Schaeffer’s Volatility Index (SVI) of 145% is higher than just 19% of readings from the past year. This means options players are pricing in relatively low volatility expectations for the security right now. 


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