AMC's recent short interest history suggests that its short levels remained elevated throughout You can see the underlying Ortex data on the chart below. Figure 3: AMC reported short interest history. Possible stock market irregularities are routinely discussed, and AMC is still often one of the 10 most discussed stocks on Reddit.
Figure 4: Trending stocks on Reddit on January 6. Marijuana Legalization. Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Wall Street Memes. Class A. By Bernard Zambonin and Daniel Martins 15 hours ago.
Reddit Trends. By Daniel Martins May 20, See More. Let's take a look at what's happening to AMC and whether or not there's a good chance of another short squeeze. In January, speculative growth stocks took a hit thanks to concerns over potential Federal Reserve interest rate hikes. That included AMC. It certainly didn't hurt AMC stock that the company announced preliminary fourth-quarter results that indicate it will be the strongest quarter in two years.
This is key to reducing AMC's debt and returning its business to pre-pandemic levels. Besides having an unusual amount of short sellers betting against the stock, a short squeeze requires factors such as a substantial increase in trading volume to force short sellers to cover their positions. In the case of AMC, current short interest levels are considered high and unusual enough for a short squeeze to occur.
Looking at the chart below, in the red line, the growth in short interest since December is quite sharp and follows close to reaching levels similar to those seen in June, when there was the largest short squeeze in AMC's history. Figure 2: AMC share price and percentage of the float shorted. However, AMC trading volume is still very different from that seen in February and June of last year.
In January , trading volume stood at ,, Figure 3: AMC stock monthly trading volume. While it's unlikely that a major short squeeze will happen, considering AMC's current trading volume, it's still possible that minor short squeezes may occur thanks to rising short interest.
Anyone who sells options is "short gamma. Market makers who sell options may ultimately have to deliver the underlying stock, so they risk heavy losses if they have to pay more than they bargained for. To hedge their exposure, they often buy or sell shares of the underlying stock.
In the case of AMC, hordes of call options buyers left market makers with a massive short gamma position that grew as the share price inched closer to the high strike prices held by bullish investors. As the share price skyrocketed, market makers bought AMC shares to offset their exposure, adding more fuel to the rally, analysts said.
That is a gamma squeeze. Market makers may be said to be short gamma from either selling calls or puts. When a stock is falling, market makers are highly motivated to sell the stock to hedge their exposure. However, a downward squeeze on shares from gamma-induced selling is generally less extreme, compared with upwards buying pressure, analysts said.
Subscribe to our newsletter to get all the news you need to start your day. The lack of transparency is what feeds the speculation of potential squeezes and outcomes. Using the rifle charts on the weekly and daily time frames provides a broader view of the playing field for AMC and GME shares. It is worth noting that the weekly BBs are in a compression mode on GME, which indicates a price range compression that precedes the range expansion. The weekly rifle chart on AMC has form a channel tightening if the weekly stochastic crosses back down, which sets up a channel tightening towards the weekly period MA.
Keep track of your allocations and stick to short-term swings with stops in place and most importantly, be aware of maintenance margin requirements and stay well above them. Selling puts at the levels is another strategy to collect income as long as you are willing to be assigned. Featured Article: What are Institutional Investors? The Dow Jones rallied amid encouraging inflation data. Apple stock surged. Stop investing in mediocre businesses.
Buy the best, instead. However, the dip won't represent a national home price correction, Despite all the attention that renewable energy companies get, having operations in the renewable energy space alone does not make a stock a buy. In fact, several renewable energy companies are struggling just to stay profitable. Let's discuss two renewable energy stocks that look attractive right now, and one that's best avoided.
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FOX Business reported AMC to have a strong chance of a short squeeze. Coming from a big news platform it certainly brings the stock sentiment up for most retail. AMC has a high enough short interest to squeeze shorts from their positions in AMC has sooooo many naked shorts that need to be covered. High buy ratio with minimal sellers can cause a short squeeze and several gamma squeezes.