Are investors again confusing their AMC’s? Shares of AMC Networks (NASDAQ:AMCX) have gained 41% in the last three weeks of trading while meme stock AMC Entertainment (NYSE:AMC) has soared 275%. Is AMCX stock getting a free ride?
It happened in January and then happened again in March. And even CNBC seems to have been confused. AMCX shares had a two-day, 23% surge last Thursday and Friday, with pre-market trading today pushing up another 1.6%.
To be fair, there’s ample reason for some confusion. AMC is the movie theatre operator. AMCX is a streaming television provider, perhaps best known for its series The Walking Dead. Over the past decade it added other niche cable services like BBC America, IFC and SundanceTV.
But perhaps what’s got investors attention is the growing short interest in AMCX stock. As of June 4, the shares’ short volume ratio hit 21%. That figure reflects the total number of short shares traded divided by the total shares traded each day. Last week started with shares at 11.68% short. The short volume ratio for AMC stock was 19%; last week, it fluctuated between 17.26% and 21.31%.
AMC Stock Still Getting Retail Attention
As for theatre operator AMC Entertainment, shares are also up in pre-market after losing 6.68% on June 4. AMC stock is riding a second wave of retail investor buying fueled by social media hype, including meme-stock chatter in Reddit’s r/WallStreetBets forum.
Reuters reported earlier today that institutional traders are betting against another massive rally in AMC and other meme stocks with a so-called “bear put spread.” Using that strategy, an investor buys a set of put contracts, giving them the right to sell the underlying shares at a certain “strike” price by a certain time, and sells another set with a lower strike price valid for the same time frame.
If the shares don’t fall, or fall less than anticipated, the trader’s losses from the put purchase will be covered to a large extent by the proceeds of the sold put.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News and as a buyside equity research editor. His Substack newsletter, TLV Strategist, covers the Israel business scene.