![]() ![]() 13, 92.42 million shares were held short, according to New York Stock Exchange reported data. Here's the thing: AMC's short interest and short ratio aren't all that impressive. The higher the short ratio, the more likely it is that short-sellers will feel "trapped" in their position if a stock they're betting against moves strongly higher. It's a function of dividing the number of shares held short by a company's average daily trading volume over a defined period, usually three months. The short ratio describes how many days it would take for all short shares to be covered. The short ratio, also known as "days to cover," plays a key role as well. ![]() The higher the percentage of short shares held relative to a company's float (the number of tradable shares), the more likely a short squeeze. For example, short interest is a commonly used metric to determine where a squeeze could be possible. While there are no guarantees in the stock market and there is no such thing as a stock guaranteed to squeeze, there are certain parameters investors can look for to signify whether a short squeeze is likely. This news caught short-sellers off-guard, and shares of the company catapulted from $2 to $20 in a few days. However, the company was able to save itself by selling its common stock and issuing high-interest debt. Short-sellers had been betting that AMC would file for Chapter 11 bankruptcy protection at some point in January. We already witnessed a short squeeze with AMC in late January. Under the right circumstances, a short squeeze can cause a very short-term parabolic move to the upside. To cover a short position, shares must be purchased. However, losses for short-sellers are, in theory, unlimited. Short-sellers' gains are capped at 100%, because a company's share price can't go below $0. A short squeeze is an event whereby short-sellers - investors who bet that the share price of a company will fall - seek to run for the exit and cover their positions. Why the love for AMC from the retail community? The clearest answer is AMC's retail shareholders are betting on another short squeeze. Of the more than 8,200 listed securities on Finviz, AMC has more than doubled up the second best-performing stock in 2021. On a year-to-date basis, through this past weekend, shares of AMC were up 2,266%. ![]()
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