Pete Najarian Recommends Using Options To Play AMC Entertainment

As AMC Entertainment Holdings Inc AMC soars, manage risk by buying options said Market Rebellion co-founder Pete Najarian, who appeared Wednesday on CNBC's "Fast Money Halftime Report."

What Happened: AMC Entertainment climbed to over 100% today as retail traders squeezed short-sellers of the movie theater chain. 

The company announced Tuesday it entered into an agreement to raise $230.5 million of cash by selling equity to Mudrick Capital for 8.5 million shares of AMC Entertainment stock at approximately $27.12 per share.

AMC Entertainment CEO Adam Aron took to Twitter Tuesday night to reassure investors that he had the shareholder's best interests in mind.

Related Link: Own AMC Shares? Get Rewarded With A Free Popcorn Under New Investor Connect Program

More than 500 million AMC shares change hands in a typical week. In our view, selling only 8.5 million shares is an example of our responsibly raising capital, and arming AMC with $230.5 million of additional cash by so doing. {2 of 2}

— Adam Aron (@CEOAdam) June 2, 2021

Aron announced the company is launching AMC Investor Connect via Twitter.

Today, AMC and I launch an innovative effort to communicate often with AMC shareholders. #AMCInvestorConnect gets you AMC Stubs benefits and ***SPECIAL SHAREHOLDER REWARDS*** for those who patronize AMC Theatres in the U.S. Sign up is completely free at https://t.co/b5l62CQlD0 pic.twitter.com/h42VGCCD1I

— Adam Aron (@CEOAdam) June 2, 2021

Najarian Is Playing With Options: Owning stock in AMC Entertainment right now is "very dangerous," Najarian said.

Najarian told CNBC that when he buys an options contract, he knows exactly how much money he can lose.

Options limit downside in a trade, Najarian said, adding "you can really get caught holding the bag" by owning the stock. 

See Also: AMC Shorts Get Smoked And Options Traders Jump In

Najarian added that he doesn't understand why anyone would consider shorting AMC Entertainment after witnessing what happened with GameStop Corp. GME earlier in the year.

At last check Wednesday afternoon, AMC Entertainment shares were up 97% at $63.

Photo by Mike Mozart from Flickr.