Investors with short options in AMC, who bet on a possible fall in the shares of the US cinema chain, lost more than 1.2 billion dollars in the last week due to the rally experienced by this value, which gained 116% in five days.
Shares of AMC, a favorite of retail investors coordinated in online forums, ended the week at a price of $ 26.12 after starting at just over $ 12.
The spectacular rise slowed somewhat during the closing hours of trading on Friday, after AMC shares soared to a price of nearly $ 34, then fell back.
According to data from the firm S3 Partners published by the CNBC channel, funds with short options lost about 1.23 billion dollars as a result of the rise registered during the last five days.
An unexpected rise in the price of a stock, such as the one experienced this week, forces investors in the short options market to reduce losses by buying the securities of those spoiled options, thus driving purchases even more the value of the securities without there being a market basis for it.
So far this year, AMC’s shares have appreciated more than 1,100%, after becoming, together with GameStop, one of the preferred bets for small internet investors in their battle against large funds.
They have done so despite the fact that the chain of cinemas is going through significant difficulties affected by the closures decreed by the COVID-19 pandemic and the reluctance of many viewers to return to theaters.
Those difficult business prospects had led many funds to bet against AMC stocks, which have a much higher short option ratio than most companies.
Those investors, however, did not have the legions of people who, coordinated through forums on platforms such as Reddit, have bought large amounts of titles from these and other companies, in an attempt to make money and, at the same time, hit big. Wall Street funds.
