Shares of AMC Entertainment Holdings Inc have been hit by a wave of bearish options bets amid uncertainty over the company's stock conversion plan.
Closed signs are seen on an AMC Theatre during the outbreak of the coronavirus disease , in New York City, U.S., April 29, 2020. REUTERS/Brendan McDermid/File Photohave been hit by a wave of bearish options bets amid uncertainty over the company's stock conversion plan.
Once AMC is able to convert the preferred shares, the two share classes are expected to merge. Should that happen, traders expect the price of the common stock to fall while the APE shares rise in value.it in February, alleging AMC rigged a vote to approve the conversion. AMC did not immediately respond to a request for comment on Thursday.that would have allowed AMC to proceed with the conversion, which the company said it needs to raise cash and avoid bankruptcy.
"The short borrow rates are high, which may mean that puts are the best way to get downside hedge exposure," said Brent Kochuba, founder of options analytic service SpotGamma, who noted there may be additional reasons for the bearish bets, including traders looking to take advantage of the stock's heightened volatility.
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