I know there is another thread on GameStop but this is AMC. Tomorrow I think contracts come due on GameStop and will be a wild day. At some point, this crazy trend will be looking for the next heavily shorted stock and it seems to be AMC based upon yesterday’s indications. I’m not a market expert and this seems more like gambling then investing as it’s inevitable GME will topple over in a dramatic swift way, but it’s a crazy phenomenon and have to imagine there will be a new GameStop stock very quickly.
Any thoughts? It appears it has to be a heavily shorted stock to qualify.
If the price goes to $59 on Monday than the price of his options would rise and he could sell the option for a profit. People rarely buy options to ride them out to the expiration date, they trade them when they move in a favorable direction.
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Aren't you betting the company goes kaput? If the company goes bankrupt and the stock goes to 0, those contract would be worth a max of $2. Even if Game Stop tanks to 50 on Monday I don't see the value of those puts going up very much.
If the price goes to $59 on Monday than the price of his options would rise and he could sell the option for a profit. People rarely buy options to ride them out to the expiration date, they trade them when they move in a favorable direction.
The strike price of the option is $2. What is the maximum anyone would pay for the right to sell something at $2/share? $2ish bucks if the stock was at $0?
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In comment 15138663 Kevin999 said:
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Aren't you betting the company goes kaput? If the company goes bankrupt and the stock goes to 0, those contract would be worth a max of $2. Even if Game Stop tanks to 50 on Monday I don't see the value of those puts going up very much.
If the price goes to $59 on Monday than the price of his options would rise and he could sell the option for a profit. People rarely buy options to ride them out to the expiration date, they trade them when they move in a favorable direction.
The strike price of the option is $2. What is the maximum anyone would pay for the right to sell something at $2/share? $2ish bucks if the stock was at $0?
Not much. If I had more guts I'd of bought the $80-100 strikes....but I treat this like Vegas/gambling money and it's fun.
I’m long AMC and sold calls against my common yesterday ... the $40 strike selling at $1.85 maturing in 7 days ...that’s an expected $29 increase in 7 days over the $13 the common trades at which is a 223% implied return in one week or 116x on an annualized basis ... I don’t know what Gen ex Rock star bought those calls from me but you have bigger stones than Yosemite.
If the Amc bonds are indeed trading at a deep discount ( can one of you bond guys confirm ?) that is good and bad but mostly bad. The good is the bond holders dont think amc can/will issue a shit ton of equity and buy the bonds back in the market or redeem them. So the risk of a highly dilutive equity raise to allow the shorts to cover is not priced in the bond market. The bad is that if those bonds are trading at a discount the bond market ( which has yet to be infiltrated by lunatic Robin Hood hyenas with stimulus money) also thinks the equity is worth zero. silver lake ( a blood thirsty hard money lending PE shop ) issued them $600m in debt https://www.hollywoodreporter.com/news/amc-theatres-unveils-new-debt-deal-bondholders-1302870 but converted the notes to common at $13 in all this madness and did very well https://twitter.com/mattzeitlin/status/1355282569294729221?s=21
The positive is that silver lake negotiated a $13 conversion price months ago so there MAY appear to be some rational scenario in which the equity is worth $13. https://www.businesswire.com/news/home/20180914005261/en/AMC-Entertainment-Closes-on-600-Million-Strategic-Investment-from-Silver-Lake
The bonds had an jnterest rate of 2.95% but there was a equity PIK ( payment in kind ) component at a discount to current prices .. it was secured debt so it was senior to much of the debt stack. Amc has $5b still in debt, would like to understand how the company is worth more than that let alone how the common equity is worth $13, I’m looking for the exit Monday or Tuesday absent and brilliant contrarian analysis.
I forget the name of the other platform that suspended trading, but they had similar claims, except it was their 3rd party clearing house that could not handle the volume without an infusion of funding.
I forget the name of the other platform that suspended trading, but they had similar claims, except it was their 3rd party clearing house that could not handle the volume without an infusion of funding.
Yes. the big issue people are having is that Vlad (Ceo of Robinhood) claimed there was no liquidity issue and it was in the best benefit of their clients to suspend/limit buying stocks.