The Battle of the Apes, AMC

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. 

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.