AMC stock slides 34% as Reddit favorite plans to sell nearly 12 million shares

Jun 3, 2021

Lead Stories

AMC stock slides 34% as Reddit favorite plans to sell nearly 12 million shares
Carla Mozée – Markets Insider
AMC tumbled more than 30% during Thursday’s session after the movie-theater chain at the center of a massive rally fueled by retail traders on Reddit and Twitter filed a plan to sell nearly 12 million shares and cautioned investors they face potential losses.
The company reached an agreement with investment bank B. Riley Securities and Citigroup Global Markets Inc. to act as agents to sell up to 11,550,000 Class A shares from time to time, according to a filing with the Securities and Exchange.

****JB: Also see The Wall Street Journal’s story, AMC Files to Sell More Than 11 Million Shares, Sending Meme Stock Falling.

AMC Options Are Also Trading Wildly
Andrew Bary – Barron’s
The wild trading in AMC Entertainment Holdings stock has spilled over into the options market where prices of puts and calls are elevated because of the extraordinary volatility in the shares.
The implied volatility of short-dated AMC options has surged to over 500%, which is rare for any stock. This means that options prices are high. The implied volatility of the S&P 500 index is closer to 20% and most individual stocks rarely have implied volatilities above 100%.

‘Don’t Be That Sucker:’ Traders Warn Against Joining AMC Rally
Ksenia Galouchko and Lisa Pham – Bloomberg
AMC shares are up almost 3,000% this year on Reddit frenzy; Market players say buyers risk losing money in volatility
The staggering surge in AMC Entertainment Holdings Inc. as a result of Reddit fans’ frenzy is making professional market participants increasingly uneasy. After retail traders sent the shares of the unprofitable movie-theater chain to a record high, bringing this year’s advance to almost 3,000%, investors and strategists are warning that the chances of getting badly burned and losing money on this trade are now very high.

Pit Closures = Corn, Soybean Market Instability, Trader Says; Once Electronic Trading Took Over, Big Local Traders Trimmed Back Their Trade Size.
Mike McGinnis – Successful Farming
It’s been six years since CME Group shifted from trading agricultural commodities mostly on the floor of the exchange to its electronic trading platform (Globex). In July 2015, the exchange closed its agricultural futures trading pits, leaving open only its options trading pits. This May, CME Group officially closed all its open-outcry trading pits, ending a tradition that started in the mid-19th century.

****JJL: New contracts to be pit traded include sour grapes. Markets evolve. They are never as they once were. Things change.

Market makers in ‘fear mode’ ahead of Friday’s $575M Bitcoin options expiry
On June 4, a total of 15,530 Bitcoin (BTC) options are set to expire, which represents $575 million in open interest. At the moment, bulls are still heavily impacted by May’s 37% BTC price correction, and this has led most call (buy) options to be underwater.

‘Skittish is an understatement’ says economist as May jobs report looms for U.S. markets
Mark DeCambre – MarketWatch
Friday’s going to be a big day on Wall Street.
May employment data won’t make for a typical monthly report. It comes after April data showed that just 266,000 new jobs were created on a seasonally adjusted basis, significantly missing economists’ forecast that had come in on average at around 1 million.

Sleepy FX markets are a sign of complacency, investors warn
Ritvik Carvalho – Reuters
Hedging costs for foreign exchange swings across the world’s 10 most-traded currencies have dropped in recent weeks, causing market watchers to warn of investor complacency and to encourage the buying of protection against future volatility.

Exchanges and Clearing

ICE Announces Record Activity in TTF and JKM Gas Complexes as They Evolve into Global Benchmarks; TTF Futures Open Interest +21% y/y; TTF Futures Volume +22% y/y; Number of participants trading TTF +83% since 2016; JKM Futures & Options OI +10% y/y; Volume +15% y/y
Intercontinental Exchange, Inc.
Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of data, technology, and market infrastructure, today announced record activity in the TTF natural gas (“TTF”) and JKM LNG (Platts) (“JKM LNG”) benchmarks, which work together to provide the market with a global reference price for gas.

SGX welcomes Synergy Futures as Derivatives Trading Member
Singapore Exchange (SGX) today welcomed Synergy Futures Limited (Synergy Futures) as a Trading Member of its derivatives market. Synergy Futures is a Hong Kong-based company that offers trading and risk management services spanning futures, options and securities to domestic and global institutional and professional investors. Synergy Futures is licensed by the Securities and Futures Commission of Hong Kong to deal in securities and futures contracts.

FIA Japan Elects FY2021 Board of Directors, Appoints New Officers
Futures Industry Association Japan (FIA Japan), the leading financial industry association in Japan with a focus on derivatives, held its 33rd Annual General Meeting (AGM) on May 26, and elected 16 Board Members for fiscal year 2021. Following the AGM, the board members elected their new Officers for FY2021.

NYSE Pillar Options Migration: Arca Options Pillar Cert, Client Communication, Membership Update, System Specification Updates
Pillar Certification Environment and Timeline
NYSE Arca Option’s Pillar Certification environment (“Pillar Cert”) is available for testing and now supports Outright order processing functionality with Risk Controls, in addition to Trading Floor gateway order processing and all other previously announced features.

Optiver Welcomes S&P E-Mini Block Trade Eligibility
Press Release
Optiver, a top market maker in S&P derivatives, welcomes CME’s move to make options on its flagship E-mini S&P 500 futures contracts eligible for block trading. Block trading combines the benefits of direct liquidity sourcing with electronic execution to provide end users with the ability to transact during an extended 23-hour trading day. This move will broaden market access for institutional users, boost liquidity and strengthen market structure.

Regulation & Enforcement

Libor’s US replacements: no one rate to rule them all
Claire Jones – Financial Times
There are many reasons why attempts to ditch dollar Libor are proving difficult. One of them is that there are multiple candidates vying to replace the doomed benchmark.
The UK’s Libor transition is not without its issues. But what’s helped is that a consensus has formed around the Sterling Overnight Interbank Rate, or SONIA, as the agreed-upon alternative.

Opinion: High-frequency trading brings real benefits but still could wind up hurting the stock market — here’s why
Donald MacKenzie – MarketWatch
More and more trades are happening away from the public stock exchanges that set prices
Around half of all the buying and selling of U.S. shares is by computer algorithms that measure time in nanoseconds, or billionths of a second. Those high-frequency trading algorithms help make trading cheaper, indeed effectively free for members of the general public. But there are expensive speed races at the heart of HFT, races that reduce the savings to the public stock markets.


Move Over Gamestop, AMC Entertainment Options are now Where the Action is.
David Borun – Zacks (via Nasdaq)
Earlier in 2021, we saw some pretty incredible trading in the shares and options of video-game retailer Gamestop (GME) when the stock went from $10/share all the way to $483, fueled by the trading of the Reddit community in Wallstreetbets who correctly sniffed out big short interest and then caused (or simply exacerbated) a short squeeze.
After falling back to the $40 level, Gamestop shares have risen all the way back to over $280 recently. It’s no longer the hottest stock with the meme-traders, however. Right now that title belongs to the shares of movie theater operator AMC Entertainment (AMC).


What Is a Meme Stock? Workhorse May Be the Newest One.
Al root – Barron’s
Shares of Workhorse are surging after big gains Wednesday in a sign that the electric-van maker is becoming a meme stock. But what is a meme stock, anyway?
Workhorse (ticker: WKHS) shares rose almost 20% Wednesday and were up another 37% in early trading Thursday, briefly breaking $17 a share. The S&P 500 and Dow Jones Industrial Average, for comparison, were down 0.5% and 0.3%, respectively.

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Past Options Newsletters

The Spread – July 30, 2021

The Spread – July 30, 2021

Earnings season in full bloom; Options lead year-to-date derivatives volume; Robinhood’s IPO; John gets real with Get Real VR: Conflicting factors underpin volatility; Cboe cleared for fall European competition; and the Cboe Options Institute’s Kevin Davitt talks about vega in this week’s “Term of the Week.”

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