Cherry picks

Meme Mania Makes a Comeback

By:Nick Battista

Here’s what you need to know as AMC and GME rocket to the moon

  • GameStop and AMC have both reached volume in the hundreds of millions of shares.
  • Other high short interest stocks seeing a bit increase in share-trading include KOSS and SunPower.
  • With AMC and GME options, the cost of speculation has moved farther upside, given that the floor is zero.

GameStop (GME) and AMC Entertainment (AMC) are experiencing a surge in trading volume. AMC has reached 500 million shares and GME has traded 137 million. Keep looking out for halts!

Meme stock mania is back! For this week’s Cherry Picks, we looked at the wild flow of share volume into a number of the meme stocks, GME and AMC being the most active:

AMC volume

GME Volume

Other high short interest stocks have seen increases in share-trading activity, KOSS (KOSS) and SunPower (SPWR), in particular, have seen large spikes in activity:

SPWR Volume

KOSS Volume

With this sort of activity, and with the squeeze higher in price, these underlyings tend to see massive increases in call skew. Normally, skew looks like a smile or smirk as in QQQ below.

QQQ Volatility smile

In comparison, you can see massive call skew priced into both AMC and GME options, meaning the cost to speculate on further upside movement is significantly higher than downside speculation. This is typical with very high volatility underlyings, given that the floor is zero and the upside is perceived to be asymmetric

AMC Volatility skew

GME Volatility Skew

It's no shock to see this sort of skew in these names, given the exceptional moves and renewed interest in sticking it to the shorts. The question is, will it stick? AMC announced yet another share offering this morning. Is GME next? Let me know what you think on Twitter (X) @tradernickybat

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Nick Battista, tastylive director of market intelligence, has a decade of trading experience. He appears Monday-Friday on Options Trading Concepts Live. On Wednesdays, he co-hosts Johnny Trades. @tradernickybat 

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