Options Bulls Entertain More Upside for AMC

The sentiment surrounding AMC has been overwhelmingly bearish

Digital Content Manager
Apr 29, 2020 at 1:32 PM
facebook twitter linkedin

Movie theater giant AMC Entertainment Holdings Inc (NYSE:AMC) is on a roll this week, snatching up multiple one month highs and on its way to its biggest weekly win in over 20 years, up 67.6% so far. The equity is extending that rally into today, up 23.2% at $5.10, amid news that it will no longer play Universal Studio films in any of its theaters. The decision follows comments from the CEO of NBCUniversal -- a subsidiary of Comcast (CMCSA) -- that the company plans on releasing its films in theaters and direct-to-home formats simultaneously. The decision will go into effect as soon as its theaters -- shuttered by the coronavirus pandemic -- reopen. 

Options traders are coming out in droves today, with 39,000 calls and 21,000 puts across the tape so far -- four times the intraday average. The two most popular contracts are the weekly 5/1 6-strike, and monthly 1/21 8.45-strike calls, with positions being opened at the former. On the other end of the spectrum, the December 2 put is seeing some action today, with positions being opened there. 

Today's options activity is outside the norm. In fact, in the last 10 weeks, 1.64 puts were picked up for every call at the International Securities Exchange (ISE), Cboe Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than all but 2% of readings from the past year, too, suggesting a much healthier appetite for long puts of late. 

The options pits aren't the only place where pessimism is lurking -- analyst sentiment shows that of the 11 covering the stock, seven consider it a tepid "hold," with not a single "buy" rating to be seen. Adding to this, the consensus 12-month price target of $3.10 is a 40.4% discount to current levels. 

Short sellers have been piling on the movie concern, too, with short interest up 27.4% in the last reporting period. The 24.19 million shares sold short represent an eyebrow-raising 47.3% of AMC's available float, and would take nearly a week to cover at the stock's average daily pace of trading. 


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners