Full explanation of this morning’s price movement in $AMC and why this means “Next Stop Moon!” 🚀 🚀 🚀
The HF’s and the MM’s are getting pretty desperate to pop this thing. $AMC CEO made the right decision to raise capital; he wouldn’t be retarded enough if he didn’t. It’s prudent financial management to reinvest and another reason why $AMC is going to recover greatly as we re-open. This doesn’t even include the ‘next-gen’ theaters that are being developed to include immersive experiences, "choose your own adventure" movies, augmented reality, and 3D video gaming without VR headsets. But I don’t know anything about that…… i just ate a crayon!
Is $AMC about to become the next hot tech stock?
Here’s the deal. The HF’s used the news about the new infusion of shares to try and pop the bubble by dumping in pre-market and at open. It had an impact, but limited. They are running out of ammunition to stop this runaway train.
There was also the multiplier effect from hedging exposure to ITM calls expiring friday in the range of $50-70. As the price fell, the trading algorithms automatically unwound the hedges against their call exposure as ITM calls went OTM and they no longer had to hold the shares. It started a cascade of 20%, which is small potatoes for shares that were up 100% yesterday. It’s a small correction which will lead to ‘sideways consolidation’ before the next big move up.
Here’s the thing. All of those ITM calls that went OTM will go right back ITM as the price recovers. This means the HFs will once again have to buy back shares to hedge their exposure to calls that were deep OTM just a few days ago. There is A LOT of call option volume which means there will be tonnes of MM hedging buying up the shares again as the price starts to recover. So, instead of dumping shares into a falling price, they will be forced to buy shares as the price rises. It will have a ‘spring multiple’ effect, like releasing a beach ball underwater! And again, even OTM shares with low delta need to be hedged as the price rises and the delta rises.
via r/wallstreetbets https://ift.tt/3qhG8Zq
June 3, 2021 at 07:51PM