The Battle of the Apes, AMC
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Thus, where to begin?
Following the Option trades and putting together an Excel sheet on a daily basis for AMC to get an understanding WHAT the numbers are telling you.
The trading volume was higher than usual. Yesterday about 180,000 contract and today about 190,000 contracts. Even though the apes could not break through the resistance level of $39-40.
What happened on Monday?
Yesterday after market the Earning report for AMC came out. Their sales are up but only 10% of what it was pre-pandemic. And the uncertainty about the DELTA variance also has its negative impact on going to the theaters. AMC was losing big money pre-pandemic with a revenue of 5.5 billion Dollars.
AMC reported 22 million ticket sales in the first quarter, up sharply from its 7 million ticket sales in the first quarter and well below a record 97 million ticket sales in the second quarter of 2019. AMC reported $1.8 billion in cash and $2 billion in liquidity as of the end of June.
Dan Nathan said the thing that's unique about AMC is that 80% of the company’s stock is owned by retail investors rather than institutions.
“If I look at it from an institutional perspective, it’s uninvestable. They were losing money in 2019 before the pandemic when their sales were more than $5.5 billion,” Nathan said.
“Retail sees something very different in this than institutions.” You sell the rumor and you buy the facts. AMC spiked briefly and that was it. Price target for the most analysts did not change. 12 months target is averaged at $5.85 with a high target of $20.
WHY is it that the Apes cannot drive the stock price up?
Think about it, what they do. They are not investors. They are not day traders. They are not gamblers. They are lottery ticket buyers. The modern way of winning the lottery and hanging all your dreams on that ticket. Buy a ticket every week. One week we will go to the moon, bro.
They buy one week terms only, 95%, which means their call options expire a few days down the road. Very few calls have a longer time horizon.
You buy a call and the market maker buys the underlaying asset to cover his position. It is a married call or married put, if you bought put options.
Now every week your calls expire and the MM sits on your shares!!! How many week does it take to fill up a truck with shares? None. They own already all the shares from mid of June and they only have to cover your calls very little or not at all. WHY?? Because they own them already. AMC is range trading and the market maker and your broker love it. You pay commission to the broker and the MM wins on the spread and slippage and keeps your money at the end of the week. Lovely job!!!
You are just tossing money down their throat. Look at Goldman and Sachs earnings and where they make their money.
With a dwindling trading volume and a range trading in place the stock goes nowhere.
You have to buy more shares than the Market Makers are holding. Thats why I say the downside is more promising because there were never too many Put options.
Also to consider, the apes went to other stocks, Like Hobin Rood, another scam.
Conclusion and the take outs.
In the beginning of the squeeze there was the surprise! There was momentum. There was trading volume. There was "All Apes on board we are going" I made good money too but I cling on the outside with a parachute and let go when momentum goes down. Then you play the other side.
Now we have to have patience, There is no momentum, it is dwindling. The trading volume is falling. Apes go to other banana trees.
This week,
Trading volume is up big time but still not enough. We will see tomorrow. This I think will be the biggest thing to watch.
There are more PUT Options out there this week than we saw it before. the ratio is 1.5, which means for every Call there are 1.5 PUTs. But as before their perspective is base on a one week horizon. Cheapies. They have no money or they dont believe in their own trading skills. Maybe there are none?
The Market Maker Sweet Spot
The market maker will try to keep the price within the Sweet Spot. And they easily can do that. Even with a huge volume Monday and Tuesday, which drove the price up because also the MM need to react and coordinate with their buddies, they drove the price right down where they want to have it. This game is rigged against the retail trader and there is nothing to complain about it. Learn it and deal with it. Do not buy short term options. Only if you hedge them with a calendar spread.
Outlook and conclusion
So we can say that the huge trading volume this week establish the Avenger Apes. Those Apes who turn their back on the Ape Army. The level at $34 is important and then $30 and then $26. But when you look at next week they all disappear. The levels are not strong either. We have seen three times open interests at those levels. 24,000 contracts. Now we dont make 8,000 and the week is half way in.
I believe even with this higher trading volume, that the price cannot break $40. The Apes need a March on Rome, like in the beginning. They dont have it. Fact. They could have done it in the past six weeks. They didnt do it.
This week we have a lot Avenger Apes.
I dont think we will break below $30 this week. Probably we will stay right in the MM Sweet Spot trading volume permitting!
But before you take my word do your own analysis.
Images are missing and can be found at hedgingstocks.blogspot dot com
Following the Option trades and putting together an Excel sheet on a daily basis for AMC to get an understanding WHAT the numbers are telling you.
The trading volume was higher than usual. Yesterday about 180,000 contract and today about 190,000 contracts. Even though the apes could not break through the resistance level of $39-40.
What happened on Monday?
Yesterday after market the Earning report for AMC came out. Their sales are up but only 10% of what it was pre-pandemic. And the uncertainty about the DELTA variance also has its negative impact on going to the theaters. AMC was losing big money pre-pandemic with a revenue of 5.5 billion Dollars.
AMC reported 22 million ticket sales in the first quarter, up sharply from its 7 million ticket sales in the first quarter and well below a record 97 million ticket sales in the second quarter of 2019. AMC reported $1.8 billion in cash and $2 billion in liquidity as of the end of June.
Dan Nathan said the thing that's unique about AMC is that 80% of the company’s stock is owned by retail investors rather than institutions.
“If I look at it from an institutional perspective, it’s uninvestable. They were losing money in 2019 before the pandemic when their sales were more than $5.5 billion,” Nathan said.
“Retail sees something very different in this than institutions.” You sell the rumor and you buy the facts. AMC spiked briefly and that was it. Price target for the most analysts did not change. 12 months target is averaged at $5.85 with a high target of $20.
WHY is it that the Apes cannot drive the stock price up?
Think about it, what they do. They are not investors. They are not day traders. They are not gamblers. They are lottery ticket buyers. The modern way of winning the lottery and hanging all your dreams on that ticket. Buy a ticket every week. One week we will go to the moon, bro.
They buy one week terms only, 95%, which means their call options expire a few days down the road. Very few calls have a longer time horizon.
You buy a call and the market maker buys the underlaying asset to cover his position. It is a married call or married put, if you bought put options.
Now every week your calls expire and the MM sits on your shares!!! How many week does it take to fill up a truck with shares? None. They own already all the shares from mid of June and they only have to cover your calls very little or not at all. WHY?? Because they own them already. AMC is range trading and the market maker and your broker love it. You pay commission to the broker and the MM wins on the spread and slippage and keeps your money at the end of the week. Lovely job!!!
You are just tossing money down their throat. Look at Goldman and Sachs earnings and where they make their money.
With a dwindling trading volume and a range trading in place the stock goes nowhere.
You have to buy more shares than the Market Makers are holding. Thats why I say the downside is more promising because there were never too many Put options.
Also to consider, the apes went to other stocks, Like Hobin Rood, another scam.
Conclusion and the take outs.
In the beginning of the squeeze there was the surprise! There was momentum. There was trading volume. There was "All Apes on board we are going" I made good money too but I cling on the outside with a parachute and let go when momentum goes down. Then you play the other side.
Now we have to have patience, There is no momentum, it is dwindling. The trading volume is falling. Apes go to other banana trees.
This week,
Trading volume is up big time but still not enough. We will see tomorrow. This I think will be the biggest thing to watch.
There are more PUT Options out there this week than we saw it before. the ratio is 1.5, which means for every Call there are 1.5 PUTs. But as before their perspective is base on a one week horizon. Cheapies. They have no money or they dont believe in their own trading skills. Maybe there are none?
The Market Maker Sweet Spot
The market maker will try to keep the price within the Sweet Spot. And they easily can do that. Even with a huge volume Monday and Tuesday, which drove the price up because also the MM need to react and coordinate with their buddies, they drove the price right down where they want to have it. This game is rigged against the retail trader and there is nothing to complain about it. Learn it and deal with it. Do not buy short term options. Only if you hedge them with a calendar spread.
Outlook and conclusion
So we can say that the huge trading volume this week establish the Avenger Apes. Those Apes who turn their back on the Ape Army. The level at $34 is important and then $30 and then $26. But when you look at next week they all disappear. The levels are not strong either. We have seen three times open interests at those levels. 24,000 contracts. Now we dont make 8,000 and the week is half way in.
I believe even with this higher trading volume, that the price cannot break $40. The Apes need a March on Rome, like in the beginning. They dont have it. Fact. They could have done it in the past six weeks. They didnt do it.
This week we have a lot Avenger Apes.
I dont think we will break below $30 this week. Probably we will stay right in the MM Sweet Spot trading volume permitting!
But before you take my word do your own analysis.
Images are missing and can be found at hedgingstocks.blogspot dot com
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I tried to update here but then twice I clicked the wrong button. Thats it. I have other things to do now. Sorry about that.บันทึกช่วยจำ
Comment: Comment: Thus, the Apes lost big time again. They go to work and waste all their money. Every Friday is payday for the Market Maker. AMC closed as predicted at the lower end of the Sweet Spot. This also shows me three things.1. The Market Maker prefer that spot at the lower and not at the higher end.
2. The increased buying of Puts kept the price at the lower end and might continue next week to the down side. Downside pressure.
3. The Ape Army cannot make a march on Rome since they have no trading volume or soldiers and /or not enough money.
Here you have it. Rule number 1 of a trader is to protect your assets from diminishing. Do your own research and start small. Dont get hyped up. It is not YOLO and avoid 90/90/90
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Update Monday August 16th, 2021AMC traded at close to 50% level of the average daily trading volume. Out of 439,171
options there have been 67% Calls and 33% Puts. The Call to Put Ratio in trading is 55%. The CPR of the Open Interests is 67%. So far there are about 88,000 Options to expire this Friday with a total value of $106,000,000.
There are Resistance and Support levels at 32, 34, 36. All of them are weak levels. At the $40 level we have a strong Resistance level with about 25,000 Calls. This is a stronger level than in the past. The Apes were very active today and seem to have gotten their pay checks.
The Puts are evenly seeded.
The Market Maker Sweet Spot moved upwards slightly from 34-35 to 35-36.
We will see until Wednesday where the move goes. The Apes have to keep the pressure on to have any chances to move past 40. The buying of calls was big today and a surprise. Nevertheless it could move the price by only 2 Dollars.
If this continues AMC might end up at $40 by Friday but it will still be a loss since 80% of those call options will expire worthless. And remember who will own the shares at expiration?
Even with a price of 42-44 Dollars those Call Options will NOT be profitable and an experienced trader knows that. So IMO they throw more money at Goldman and Sachs to feed their profits.
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Update AMC 8/19/2021After the week was starting out stronger for the Apes as before Thursday ended with a very low trading volume. I expected more.
If you want to see the pictures to the story, you have to go to
hedgingstocks.blogspot dot com/2021/08/update-amc-8192021.html
While AMC was increasing the average daily trading we noticed today that the volume cut out at around 27%. The Option trading volume reached about 75% of the Monday and Tuesday volume and only 60% compared to last Thursday.
There were about 300,000 options changing hands today, 60% of them were calls and 40% Puts. These numbers do not mean that those options were bought. They were sold and bought. What ended up in the OPEN INTERESTS shows you if there are an increase of positioned buyers and sellers. Thus, even there is a 60% call option trading it could mean they were excessively sold.
I walked up the Sweet Spot of the Market Maker from 34-36 in the beginning of the week to 35-36. And today it looks like it moved again slightly UP to 35-37. This is where the MM want to be tomorrow when about 112,000 options with a total estimated value of $119,000,000.00 will expire. The payout for the MM would be around 5.5 to 6.5 million Dollars only.
That the closing price ended below the sweet spot at 33.84 might show in my opinion that The Put buyers were outnumbering the call buyers. It could also mean that buying calls do not have the expected effect on the share prices, remember, you are buying a derivative, a contract and not the shares themselves, and hence the Market Maker is only forced to buy the shares if he needs to cover. This would influence the price upwards. But also notice the apes buy their lottery ticket on a weekly base and hence the options expire on every Friday. The market maker still have the shares from the week before and hence they just take you contract and sell the shares instead of buying because they might have a shotload of them already. And why I am saying it I have the feeling that the price of AMC drops easier with a 1:1 volume or even less than that. I expected the price dropping this week below 30.
Thus, buying call option might only have less price influence. And that’s why I strongly believe all 122,000 options will expire worthless inside the sweet spot tomorrow. 35-37. If AMC closes below 35 it would show me the increasing strength of put buyers.
Please also consider, any call option you buy tomorrow for next week will not have any effects on the price unless it is a huge volume because 75,000 x 100 shares expire and can easily be covered at closing with the excess on long positions. That’s why the price might move into the sweet spot and that’s it.
Also consider that for every call you buy there MUST be someone who is selling that call to you. That means if you are totally convinced the price goes up and buy there is another trader with the total conviction that the price will go down and sells. The MM only provides the liquidity and let the contracts expire. And they will settle with the Clearing House.
Call to Put Ratio for this week is 0.564 and for next week so far 0.69. Put buyers buying with a longer time horizon.
At $45 we have a weak level of call options. About 5,000 contracts
At $40 we have the strongest level with about 30,000 contracts
At $38 another level with about 10,000 contracts.
At $37 another stronger level of about 13,000 contracts
At $36 about 5,000 contracts
The Puts are scattered about a wider field. We find weak support levels at 35-6,500, 34-5700, 33-5700, and 32-5000 contracts.
It will be much easier to break below 30 since after $32 everything is open. Also all combined put levels make about only 80% of the $40 Call level.
Please be advised, I am not a financial adviser. I am not recommending any trades. I might be just a crazy guy with a wild brain.
As a content provider I should not pay for images. I do not take money either.
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If you want to see the two images go tohedgingstocks.blogspot dot com/2021/08/the-battle-of-amc-tuesday-82421.html
Today the Ape Army gathered momentum and drove the price higher.
The average share trading volume was surpassed by 30% and reached 225 million shares. At the same time over 1 million options contracts changed hands. 75% of which were call options and 25% put options. AMC was traded at a volume today as almost all last week. This is impressive. Since the options are all over the place I do not give credit to any institutional money. These were traded by retail traders.
Did uncle Joe hand out all the stimulus checks already?
If the apes want to press forward they have to continue the pressure and surpass the average daily trading volume. This is what I said all along. And here they come.
The levels are:
# At the $40 we have around 20,000 Call contracts with about 2 million shares.
# At the $45 we have about 8,000 Call option contracts sitting. These two levels existed already yesterday and might just have changed hands. The open interest contracts didnt change.
# The Apes increased their presence at the $50 level from 2,000 to almost 10,000 contracts.
# Then they laid some weaker levels all the way up to the heavy $80 resistance level. Here we have about 15,000 contracts sitting.
There are about half as many open interest in Put options out there than Call options.
# The Put Options, support levels, are at $37 with about 9,000 open contracts and then at 32 (6,000) and 31(4,000).
The Sweet Spot for the Market Maker sits at 35-38. Since the price of the underlaying is sitting at $44 I can say the pressure to the upside is quite high. Otherwise the MM would have dropped the price right back into the range. They couldnt do it. There are about 107,000,000 contracts to expire this Friday with an estimated value of 200,000,000.00 Dolas.
The apes loaded the $80 Resistance level with some smarter call options. They paid more and bought some time to stay longer in the game. From the 15,000 contracts about 10,000 will expire this Friday and 5,000 next Friday. Also this storm will go by.
Consequences.
My 21 January Puts sitting at $37 evolved from long Puts into a short Straddle with different expiration dates. The Puts I sold with the same strike but different DTE. Thus if the price stays above $37 until September24 that would be just great. Why?
For selling the puts my position is hedged and the potential losses with AMC trading above $40 now, received a credit, which makes up for the negative book value. So, there is no loss to my position wherever the market wants to go. Its fine with me. Even if it drops below 37-35 my long put will eat all the losses of the short put.
First I thought of selling them at $38 or 39 but I pressed the button too quickly. Thus, it became a straddle instead of a Strangle. I like more to strangle. LOL
In the technicals of the daily charts we can also see that MACD is crossing over and SMA 5 and 20 are also crossing. I believe that the apes will take that as an initiative to drive the price up this week. I am fine with this.
In the long run I still believe in a decline of AMC. This company is not worth a penny.
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AMC update 8/25/21 and Why do I choose options as level indicators?For the blog with images go to
hedgingstocks.blogspot DOT com/2021/08/amc-update-82521and-why-do-i-choose.html
I was impressed that the Ape Army could actually gather enough apes to initiate a March on Rome. They had more success than expected. But as I said, if they can gather the needed trading volume, above average, for at least 2-3 days they can drive the price above $40. And that is what they did. on last Monday they traded 260,000 option contracts and on Monday and Tuesday they traded 1 million and 1,2 million respectively. Look at the "Open Interests". These are the levels.
The funniest trade I saw was the buying of the $80 Strike long Calls with expiring this Friday. The price they paid for 9,700 contracts was about $800,000. Quiet a pricy bet.
Why do I choose options as level indicators?
If you following option trades on a daily base you can establish which options are bought and how many at which levels. You also know where the Market Maker Sweet Spots are. You also can see kind of into the future by determine how many options are bought with a longer term and at which levels. Those levels disappear with expiration date. Not all but many. And you can see what the sentiment is by comparing the Call to Put Ratio over weeks and which options have a longer term. You will see the turning point.
For example, AMC walked through the $40 level on Tuesday. The $40 level was a ceiling /resistance level with a lot of Call options. Now, while with shares I do not know where people set their Stop Loss, or Take Profit, with options I know their Strike Price and open interest volume since they are derivatives. Knowing for every call contract there are 100 shares, and assuming there are logical and psychological levels where people put their SL or TP points I further assume those levels are identical. They are increments of 5 or 10 points depending on the price of the underlaying. But thus I can determine if
a level is strong or weak. And 40 Is a strong level.
Conclusion
As soon as AMC broke 40 I knew this level was of importance. Right now there are about 20,000 call contracts counting 2 million shares. And the shares trading volume on my platform indicated.
I converted my 21 January long Puts into diagonal Spreads by selling Puts at $37 Strike to receive a credit. This short put is expiring on September 24th.
So, i dont think AMC will close below 40 this week. I bought 100 shares, went long. Lets see if the Apes will eat the bait.
Today, Thursday 26th, trading volume of AMC waned at New York lunch time. It is sitting at 32% and it seems the steam is out.
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Comment: I hope everyone made a tons of money on AMC. I certainly did with my 37 Puts.No more to the moon, bro. We run out of fuel before the rocket could take off. A lot of Apes got burned. It is proof that the economic fundamentals take over in the long run. AMC might go all the way down to $10 or lower. Thats where the company value sits.
AMC hit $18!!! Yeah, yeah, yeah. The dumb money lost all their candies
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