AMC Stock: Is Another Short Squeeze in the Works?

The Street2022-09-15

Several indicators point to the possibility of another short-squeeze setup in AMC Entertainent's stock. Here's what investors need to know.AMC Entertainment's implied volatility reading suggests there...

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Comments

Kenny1911
2022-09-15
Kenny1911
🚀
SKuan
2022-09-15
SKuan
Let's buy more and load it up to the moon!
Williamw
2022-09-15
Williamw
Ok
TSY123
2022-09-15
TSY123
Ok
- Jliang:
  Okay
- BG68:
  please like
- VingVing:
  Ok
AlanChong
2022-09-15
AlanChong
Noted

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Here's what investors need to know.AMC Entertainment's implied volatility reading suggests there...</p>\n\n<a href=\"https://www.thestreet.com/memestocks/amc/amc-stock-is-another-short-squeeze-in-the-works\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"AMC","symbol_name":"AMC院线","start_time":0,"source_url":"https://www.thestreet.com/memestocks/amc/amc-stock-is-another-short-squeeze-in-the-works","article_id":"1169033079","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1169033079","pubTimestamp":1663199232,"sourceInfo":{"source_id":"lsy1610613172068","name":"The Street"},"weMediaInfo":null,"summary":"Several indicators point to the possibility of another short-squeeze setup in AMC Entertainent's stock. Here's what investors need to know.AMC Entertainment's implied volatility reading suggests there","collect":0,"end_time":0,"defaultTopTitle":"thestreet.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"AMC":"AMC院线"},"translate_title":"AMC股票：又一次空头挤压正在进行中吗？","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AMC":0.9},"content_text":"Several indicators point to the possibility of another short-squeeze setup in AMC Entertainent's stock. Here's what investors need to know.AMC Entertainment's implied volatility reading suggests there's still plenty of room for price movement in this stock.Borrow fees — the fees short sellers pay to \"borrow\" stock to bet against — are close to all-time highs, indicating a lot of interest in shorting AMC.A rally in the broader stock market could send shares of AMC soaring.AMC's Implied Volatility TrendImplied volatility (IV) is a market forecast of a security's likely price movements. Usually, it increases in bearish markets and decreases in bull markets.Supply, demand, and time value are generally the factors that determine the calculation of implied volatility. However, IV indicates a security's market sentiment based on its price range only, not on the underlying company's fundamentals.AMC Entertainment's implied volatilitycurrently stands at 120.2. That's about 16% lower than its 20-day moving average. This points out that implied volatility is trending lower but remains super high. Apple's stock, for example, has an implied volatility of 25.1.Generally, option contracts with lower levels of implied volatility result in cheaper option prices. Therefore, traders look to buy options in periods when the implied volatility is lower.Also, when implied volatility is low, it's indicative that the market is not expecting the stock price to move much in the short term.A Spike in Borrow Fee RatesAMC's stock has jumped nearly 20% in the last five trading days. 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And considering AMC's valuations, the short selling should continue.Even though the last official data pointed out a decrease of short shares from 96.1 million in July to 89.1 million in August, roughly 17% of AMC's float is still being shorted.High short interest is not necessarily a positive indicator. It warns that the market's bearishness on a stock may not be warranted. However, considering retail investors' continued interest in meme stocks, shorting AMC could be risky — especially when borrow fees are so high.A Short-Squeeze Setup?Ever since the meme-stock craze began in January 2021, short squeezes have been a big part of the AMC story. They're even listed as one of the top risks related to AMC common stock on the company'sForm 10-K.AMC is a super-volatile trade. Traders are looking for gaps in the action to jump into cheaper options contracts.With short sellers paying higher fees to bet against AMC, they naturally become more vulnerable — especially if pressured by AMC bulls.AMC currently has a beta of 2, indicating a double correlation to broad market trends. Should the downtrend in the S&P 500 reverse, this will likely drive AMC's stock to rally again. 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