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