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AMC Entertainment: massive surge in derivatives trades based on meme stock


More than 63% of all new trades executed by UK traders with in the past two weeks have been in financial derivatives linked to shares in the US cinema chain AMC Entertainment (AMC ), the CFD broker reported this afternoon.

This is a significant jump from last month when just 23% of all first-time trades executed by UK clients were derivatives transactions on AMC. UK clients have been piling into the popular AMC trade this week with more than 82% of traders taking a long position in the so-called meme stock. Trading derivatives on AMC has been the top-traded market and instrument on the platform so far this week.

David Jones, Chief Market Strategist at high-growth European trading and investing platform,, explained: “With the crash in crypto during May, you might be forgiven for thinking that the new breed of traders has struggled to get the lottery ticket fix in financial markets. But fear not – as crypto has waned, the so-called meme stocks have come back from hibernation.”

Since 26 May, US-listed AMC – which owns a chain of cinemas – has seen its stock price more than triple. Just yesterday (2 June) the shares doubled in value, and it was the most traded in the US.

AMC Entertainment has moved to centre stage for day traders

Cast your mind back to January when the hot stock amongst discussion boards like reddit was GameStop – AMC was something of a bit-player in that frenzy but it has moved into the limelight this time around. It’s another one where the smaller investor is attempting to squeeze those who have sold short the stock.

The price of AMC Entertainment Holdings stock has been driven from around the 10 bucks level to well over $50 by traders, but that high seems to have been the peak, with the stock now falling rapidly in early trading in the US today. Fair value price in the market seems to be around the $10-12 level, and the stock AMC Entertainment is still well north of that.

Volumes on the physical stock have also been much higher than one would expect, and are back at the levels we saw in February at the back end of the GameStop saga.

No logic to 3000% price gain for cinema stock

“Markets can be difficult enough to explain at the best of times but trying to apply logic to AMC which is up around 3000% this year – depending on where in the day you are looking at the price – is a little futile,” added Jones.” It’s the concerted effort of thousands of small investors banding together to put one over on Wall Street. So far, they have been well-rewarded and who knows when the music stops?”

It’s a new phenomenon for 2021 and it is fascinating to watch – just don’t expect to be able to call the top in this one: “We may have already seen it, but then again perhaps it doubles in price once more,” Jones commented. “The volatility is really off the charts and chances are, a little like the cryptocurrency rout in May, when the price turns then a lot of fingers will get burnt.”

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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