Are Institutions Preparing to Close Short Positions in AMC?

how soon will institutions close short positions in AMC stock?
How soon will institutions close short positions in AMC stock?

Retail investors have been waiting for big institutions to close their short positions in AMC for over a year now.

Many short positions in AMC Entertainment stock still remained open after January’s and May’s runup last year.

This year’s bear market has dropped stock prices back to all-time lows.

Will this provide institutions with incentive to close short positions in AMC now?

Let’s discuss it below.

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AMC drops to all-time lows again

Are institutions preparing to close short positions in AMC stock?
Are institutions preparing to close short positions in AMC stock?

The entire market is on a free-fall.

AMC Entertainment stock managed to fall below $13 on Monday despite heavy buying volume.

The off-exchange trading for AMC is currently around 62.26% according to Fintel, and shorts have borrowed an additional 1M shares to short the stock according to Stonk-O-Tracker.

These predatorial strategies have retail investors pinned and losing money on their investment.

The economy’s health isn’t helping much either, but further fueling the market’s stress.

Interest rates are rising, inflation is at an all-time high, and the U.S is battling several issues outside the country with Russia and Ukraine, and at home.

Today’s economy has the entire market beat.

And AMC Entertainment is no exception the free-fall despite the company’s continuous progress.

AMC has become a trading ground

Traders and institutions are trading AMC at all times.

At some point, positions will have to get closed.

DTCC B16845-22 raised margin requirements by 25% for stock trading above $10 per share.

If AMC stock drops below $10 per share, then margin requirements will be raised to 30%.

This is rather significant because it requires institutions shorting AMC stock to carry more collateral.

Unfortunately for the rest of the market, institutions will continue to create massive selloffs just to keep up with these margin requirements.

But it gets worse for them because the lower AMC drops, the more collateral will be required of them.

Financial institutions are being stretched beyond their means and it’s not going to end well for them.

We’ve already seen hedge funds fall – and we can expect this trend to continue.

Related: Hedge Fund Melvin Capital is Shutting Down in June

Could institutions be preparing to close short positions?

Institutions will eventually begin to hedge on the upside (long).

For this to happen, they will need to identify the market’s bottom.

Economists believe there is still quite aways to go before the market begins bottoming out.

Others such as Forbes believes the stock market is finishing this crater of a selloff.

With this in mind, institutions always strategize when it comes to market conditions.

It is very possible AMC short sellers could begin to close their positions as the markets begin to bottom out.

When this will occur is unknown.

No one has been able to perfectly time the market; however, there are always signals in the market that allow investors to foresee specific trends.

A reversal is imminent

Despite where the bottom lies, investors holding AMC stock should know that a reversal is imminent.

A reversal is a change in the price of an asset which can occur to the upside or downside – depending on a securities’ current trendline.

For AMC, a reversal would push the stock up.

Not only is a reversal imminent for AMC stock, but for the entire market as well.

Stocks can’t keep going down forever, at some point they must go up again.

I have a feeling this is going to be one of the biggest reversals in history.

I’m interested to learn what you think.

Leave a comment down below.

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Related: Is AMC Stock Due to Go Up Next Week?

12 Comments

  1. Danielle

    8ve been holding for over 2 years now, I’ve watched it go up and down, reading the news and learning so much about this stock world. I’m not selling cuz I know your right about sooner or later it’s going to bounce up. These lil rocket rides are test rides only. Shorts have to cover for the synthetic shares to become whole, right? Or does it convert them into something like counterfeit shares? That part confuses me. You would think since we have laws on money handling, we would on stocks as well.

  2. Becky

    I’m new to trading and this market is pretty concerning. I wish the SEC would do their job, increasing collateral is one thing they need to start really fining & jailing these criminals.

    • Frank Nez

      Couldn’t agree more – thanks for your input, Becky.

  3. christioher

    This is not areal bear market. This is a bunch of hedge funds colluding together with the aim to short AMC as uch as possible with naked shorts, creating synthetic shares to do so ,in spite of positive momentium mentioned in the recent earnings call yesterday. The SEC is not enforcing anything . The huge funds and major brokers are involved with bringing the house down ,jus so you the long retail investor feels so so much loss and pain and sells under duress. They are criminals!!

    • Frank Nez

      Criminals indeed!

  4. Christopher

    AMC just reported better than expected quarterly earnings. Most of the retail investors like myself or underwater and we’ve been hurt hard but we are holding for the squeeze and I think it’s coming very shortly.They hedge funds and shorts were able to push the stock down over 9% today 05/09/22 . Volume picked up today in the stock close at $12.52. The bottom is in now, as earnings are about to continue to increase in subsequent quarters going forward and everybody and their mother is interested in getting out and socializing and the theater and a good movie at AMC theaters have been packed. Ticket prices have not phased the general public because kids want to go out and people wanna go on dates to the movies and not sit at home and Covid is in the rearview mirror now. AMC is just getting started and the head funds know it so they must start to cover especially after this good quarterly earnings I don’t think there’s much downside only upside from here who knows where we go but we go up up up up!

  5. Bob

    I hope you are right but that’s just the beginning of the collapse…
    Do you see soon a reversal when we didn’t have even crashed yet?!
    Fed’s going to increase rate all year long.
    The inflation is out of control
    The residential and commercial market are going to implode bc of crazy price plus interest rates increase.
    Did you heard about “House of Cards”?!
    Believe that’s just a scratch yet compare at what we are going to witness as a Total Collapse.

  6. Frank Nez

    Let’s start a discussion! Leave your thoughts below.

    • Vince stable

      Amc below $5 and moon time!!

      • Frank Nez

        Shorts close and BOOM 💥

    • Michael Cummings

      I have been in this play for over a year. I made $30,000 back in May and June of 2021. I lost all that money. Now the hedge funds or someone has borrowed and is shorting the stock. The time is right for a short squeeze to occur. With more incentives to cover the shorts it’s inevitable that this stock is going to go up. Be prepared because it will come like a thief in the night. Get in get out and move forward. May God will be done. I pray for your success

      • Frank Nez

        Thanks for your input, Michael. Be prepared fam.

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