Lives are about to change for the new and seasoned holder in AMC stock. With a surge of retail investors in the stock, the SEC is finally cracking down on hedge funds. AMC community, you were loud and they heard you. Here’s why I think there’s an AMC margin call right around the corner.
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I recently published an article exposing the ‘lobbied SEC’. The lack of regulation on short positions in AMC has been ignored for too long. Many of you shared this post on Twitter and used the hashtag #SECdoyourjob. I’m confident they saw YOU. So thank you for standing up for change because you got their attention.
Everything is falling right into place for AMC Entertainment stock
Hedge funds betting against this stock are destined to lose. Here’s why:
- AMC’s fundamentals are no longer fragile. Retail investors and institutions alike are buying the stock. AMC Entertainment is experiencing a surge in sales revenue now that the movie theater franchise is open.
- Shorts betting against the stock have bitten more than they can chew by continuously shorting AMC stock through the use of synthetic shares.
- Regulators are now taking the necessary precautions to ensure they don’t lose money as hedge funds continue betting against a soaring and bullish stock.
Retail investors now have the higher floor. The CEO of AMC Entertainment is in touch with his shareholders. Celebrities such as Chance the Rapper have publicly announced the opportunity of this investment. And more people are learning how to invest in the stock market through the platforms such as Franknez.com and other subreddit communities.
Wanna know what hedge funds have? Absolutely no respect nor support.
ICC-2021-007 proposal gets APPROVED
This is huge news for retail investors holding AMC. This document is 9 pages long but I’ve done the DD to help you understand what this proposal means for AMC and how it can trigger a short squeeze.
Approved on 5/18
Many retail investors have been curious as to what this proposal means and why it’s such great news for AMC. This article is going to provide you with a quick rundown of this new proposal and will be updated as new margin call news begin to develop.
1. Flexibility on margin requirements
This proposal provides brokers with flexibility on margin requirements for institutions (hedge funds) maintaining a position in risky plays, such as a short position in AMC.
If brokers feel a short position is too risky then they can raise the amount of equity required in an account.
2. Regulators request collateral
The proposal ensures regulators have some sort of collateral from all the shorting that’s been occurring. Regulators want to make sure that hedge funds have enough cash reserves to meet their minimum equity requirement
Risk management is the biggest takeaway from this proposal.
Margin calls everywhere
Regulators are going to start raising margins depending on how risky the plays are for certain institutions. Their purpose is to limit the amount of leverage hedge funds are able to use. The ICC does not want to be responsible for closing out closing hedge funds’ positions.
This is where we can begin to see shorts cover their positions. If an accounts updated margin exceeds the accounts capital, the broker can either margin call them (cover some risk) or completely liquidate their positions until the margin no longer exceeds the capital.
Overleveraged accounts could get margin called
Now, because hedge funds shorting AMC are betting against a bullish stock that only knows up, shorting the stock at the moment is ultra risky. Regulators are going to start demanding higher margin requirements as collateral.
Short sellers are sitting on nearly $1 billion dollars in loses, via REUTERS. A margin call usually occurs when an investment suffers enough losses that the investors margin account goes below a certain amount.
If hedge funds shorting AMC fail to meet a margin call requirement then the broker can begin liquidating their assets without notice. Regulators will only step in to liquidate accounts if hedge funds continue to take a nosedive in loses.
Furthermore, hedge funds are drowning every day retail investors hold the stock.
Expect a surge in price action and volatility
Retail investors can expect a surge in price action in AMC as well as volatility. Hedge funds are still borrowing shares to short the stock meaning they have ammo in their arsenal to drive the price down during upticks.
Shorts are going to begin covering their positions as the stock continues to skyrocket and as margin requirements are increased. A short squeeze is inevitable. Retail investors need to hold, stay the course, and be patient.
Citadel buys AMC stock
Citadel just recently bought AMC stock leaving many retail investors curious behind their motive.
Will they try to reduce their loses through a debit and credit scenario where they’re forced to close their positions but also break even from a squeeze?
Or is their motive to sell and disrupt AMC’s short squeeze? Citadel’s motives will become clear as this squeeze begins to unfold.
Why do I think Citadel is going long on AMC?
The entire market is crashing. These institutions are beginning to deleverage. Pretty soon there’s going to be margin calls liquidating accounts left and right. I think Citadel bought AMC long in order to keep the stocks value. They know they’re losing and they know AMC is now a value play.
A margin call will ensure they have no money left so I personally think AMC is Citadels collateral, or emergency fund post squeeze.
AMC margin call news
The purpose of this post was primarily to explain the ICC-2021-007 proposal in simple ape language for the community.
Be sure to bookmark this article as it will be a foundation to more AMC margin call news and updates.
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