The theatre chain’s stock gapped up the following day, but ran into a group of sellers which dropped the stock back to a support zone at $31.81. On Wednesday AMC dropped slightly lower and tested an old support level from 2017 at $29.45 where bulls bought the dip. The retest of the level formed a bullish triple bottom pattern because AMC had tested and held above the level on Aug. 4 and 5.
On Thursday, AMC bounced up through resistance at $31.81 and was battling to regain the eight-day exponential moving average on the daily chart. Bulls will want to see AMC close the trading day above the eight-day EMA for confidence going forward.
Options traders believe AMC has room to run and on Thursday continued piling into the trade. The traders purchased $722,603 worth of call contracts with most choosing an expiry of Aug. 20 for calls closer to the current share price than what has been seen recently.
See Also: AMC Entertainment Stock Forms Trading Range
Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.
These types of option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.
See also: How to Buy AMC Stock
The AMC Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:
AMC Price Action: Shares of AMC were trading up 6.4% to $33.57.
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