Trade of the Day: Take a Short-Term Gamble on AMC Entertainment (AMC) Stock


  • Quite frankly, the long-term investment case for AMC Entertainment (AMC) might not exist.
  • However, it’s possible that AMC stock could benefit from meme-trading sentiment.
  • The ability for shares to stay resilient points to a quick scalping opportunity.
AMC stock - Trade of the Day: Take a Short-Term Gamble on AMC Entertainment (AMC) Stock

Source: Koshiro K /

Let me be clear from the get-go. There may be an opportunity in embattled theater operator AMC Entertainment (NYSE:AMC). Yes, as a long-term investment, AMC stock appears risky. However, because of the meme-trading sentiment, the resilience of its day-to-day price action opens the door to possible profit scalping.

Investors should probably avoid extended exposure to AMC stock. Why? Experts don’t like the business. Right now, Wall Street analysts rate shares a consensus moderate sell. This assessment breaks down as four holds, three sells and most significantly, zero buys. Plus, the average price target of $4.68 implies more than 4% downside risk.

Second, insiders of AMC stock – the people that know the business the best – also presumably don’t like the business. In the past three years, data from Gurufocus shows that insiders have been exclusively selling.

To be fair, insiders sell for a variety of reasons, many of them mundane (such as tax considerations). However, investors should be looking for management to put their money where their mouth is.

Of course, there are many other headwinds to consider, such as its debt load and waning interest among consumers to watch movies at the box office. Fundamentally, AMC stock is a mess. But as I said earlier, an opportunity exists.

AMC Stock Is Incredibly Resilient

With so many awful headwinds slamming against it, you’d imagine that AMC stock would crater. However, traders must respect the data. Currently, the data shows that AMC is resilient. Perhaps it’s the meme-trading sentiment. Maybe there’s some spiritual experience associated with the security. Whatever it is, it’s working.

Since settling down into a relatively horizontal range since the May 16 session, AMC stock has frequently exceeded the $5 price level, even if the closing price ended up noticeably lower. That’s significant because it tells us that pretty much every day, the bulls are digging their heels in and pushing against the bears.

A chart showing price action and technicals in AMC stock.
Source: Charts by TradingView

So long as this dynamic holds true, AMC stock call options with $5 strike prices appear compelling. Psychologically, this level represents a milestone event, being halfway to double digits ($10). Also, anytime the security falls below this threshold, the bulls seem eager to push it above $5, thus incentivizing the short-term bullish angle.

Trade of the Day: Buy Near-Expiry $5 Calls

For the trade of the day, we’re going to go aggressive with the 2024 June 21 $5 call. The idea here is to acquire the call at the open, provided that AMC stock opens the session below $5. If this event materializes, we would be looking for shares to rise above the strike price.

Using Barchart’s options calculator, if AMC stock manages to reach $5.01 on an intraday basis on Tuesday, the aforementioned June 21 call may command a premium of 29 cents. On Monday, the option closed with a premium of 23 cents. Thus, in short order, you can possibly collect a 26% profit, assuming the bulls do their job.

Of course, the risk is that the trend is your friend – until it isn’t. Further, this is a quick-in, quick-out trade. The more you linger, the likelier it is you’ll lose. If you can handle these high stakes, this trade just might be enticing enough.

On the date of publication, Josh Enomoto 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 Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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