I know, after I got my rear handed to me with the Tesla irrational stuff, you would think I would stay away from all the AMC and Gamestop children playing on teh Reddit and Robinhood playgrounds. BUT NO. I see an opportunity to take candy from babies and I am determined to do it.
If you haven't been following, apparently AMC and Gamestop are teh darlings of the ignorant children crowd.. They pump up the stocks like Bitcoin and take glee in pummeling the short sellers. Sort of the spillover Tesla effect that I got killed on.
AMC went from $17 at the end of last week or beginning of this to almost $70 Wednesday. Absolute bedlam. Mostly people trying to punish short sellers and pump it up. A LITTLE bit because AMC got a whole $230 million of financing by selling 8 million shares. Not that much for a stock with a market cap of $31 billion. Stock shot up 95% on Wednesday and 418% the previous week. Investors felt that was a positive boost to the company. This is where it gets kinda funny.
When there's massive volatility there's money in options. The more stable a stock, the lower the option prices. So. AMC is sitting at $67 and I think "it just went up from #33 to $67 in one day, and I think that should be it. Meaning rarely companies have big news two days in a row" So what are the odds they can actually do it again? Go up say another $33? IN ONE DAY?
So I went and looked at the calls for it. Sure enough, it was at $5 for a $100 call expiring June 4. By this time it's 11:00 am today. Thursday. Stock had already been up and down on the day. Swinging wildly but not beyond $70. I think yeah, I have to survive today, another 2-3 hours. Then tomorrow's trading cycle, and the stock has to NOT do what it did yesterday. The children on reddit have already shot their ammo, bought it up, punished all the short sellers and call guys. Good time to jump in.
Sold 100 $5 calls at a strike of $100 expiration tomorrow, June 4. That's 10,000 shares at $5 each.
What happens? AMC almost right after I do this announces "oh, yeah, and we are planning to sell another 11.5 million shares" causing the stock to wobble. Then at some point says "yeah, about that 11.5 million shares? We ALREADY SOLD IT" And apparently they are filing to sell 25 million more. So they fully know they are screwing investors, diluting the stock, but taking advantage of the frenzy. There are only so many children with $30 in the bank playing on reddit who can afford to buy all these millions of shares flooding the market. Perfect timing for me. Oh, they ALSO warn these small investors that there is a reasonable chance they are going to lose all their money. hahahahahahahaha
SO what happens? Stock goes from $70 to hovering about $65 most of the day and then on the first news craters to $51, down 18% on the day. In after market trading its down to $47. Down another 8% after closing. WHat are the chances it is going to hit $100 tomorrow? Not very good in my book. I now only regret I didn't commit to 100,000 shares, or a million lol. Dang it. Either way, yes it was a risk. But I felt the train had run out of steam. I didn't realize I was about to do this just before it ran off the tracks. So if it doesn't hit $100 tomorrow, I made $50,000 in one day. I could buy the call out at opening bell for $1 or less right now and probably make $40,000 but I am gonna ride it out for the full $50K
And while I got my butt handed to me on Tesla and lost a ton, as you may recall I would have lost probably y entire life had Tesla hit above $990 by June 18. Looking like that one is going to expire and I won't be BK. Not gonna play that game again. Wait, I guess I just kinda did with AMC.
So far so good. Cleared the $50K today, but typical of me, decided to do it again for next Friday. Got the same $5 a share for the same $5, this time though I have to play the game a week. Lot can happen with that stock in a week. On the bright side, it sank to $48 today, $43 now in after hours trading. So as long as we keep getting crappy financial news out of AMC and news they are diluting their stock with more offerings, and the children playing on reddit running it up and down the ladder, I have a chance to made some money on some strike prices that are WAY out of the money. That is one benefit of volatile stocks, you can play them way way out of the money and allow the day traders their range of operation.
Big balls indeed.
Update: tomorrow is 6/11. Market closed today. AMC is at $42 If it stays below $100 by end of day tomorrow, the children at Reddit hand me another $50,000. If it stays below $140 by June 18, another $57,000. I am thinking I might be done playing this game after that. I realize you can get comfortable in a cess pool and I don't want that. Might take my $150,000 at that point and look for other opportunities for easy cash. Or solid long term investments. Like buying myself out of all those tesla shares i shorted and now am severely upside down on.
OK, AMC ran up to $49, but that's not $100, so I win $50K again. This next week if it stays under $140 by Friday I win $66,000 more and not sure why I did this but if it stays under $100 by 7/2 I keep another $36,000. I think that last one I might regret and was an overreach. The prices on calls came way down and you have to reach further in the future to get anything for them. Risky on a meme stock. Hopefully AMC can stay under $100 for another two weeks. 10 trading days. Fairly certain it will stay under $140 for 5 more. Pretty sure I am done with this high wire act after this. Not sure how many times I can play with fire and get away with it. Being paid $200,000 to dive in the pool 4-5 times is good money but one of these days you do a swan dive and find halfway down that someone drained the pool.