Market Events
Thursday, June 3rd 2021
AMC Pops Helped By Options: ORATS Reuters Article
AMC calls are bought by retail investors and as the stock rises market makers are forced to buy the stock in what is called a gamma squeeze.
Summary
Market makers are buying AMC stock to get delta neutral as short options get them short delta, leading to a gamma squeeze. This phenomenon is different from January's short squeeze and is being driven by retail investors buying calls. Susquehanna and Citadel are large holders of AMC stock.
Reuters Saqib Ahmed et al. quoted Matt Amberson of ORATS in a brief but essential phenomenon in the AMC exponential rise in its stock price: Market makers are chasing the stock. The Reuters article is here.
As gamma from short options gets them short delta, market makers will buy the stock to get delta neutral.
The character of AMC in this time is different from January's short squeeze-fueled meteoric rise. We see this with the Borrow that ORATS implies from the options market seen below.
Susquehanna and Citadel are large holders of AMC stock according to Bloomberg. As retail buyers of calls get longer delta, market makers need to buy the underlying to keep delta neutral.
Picture from @MichaelGoodwell Twitter.
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