Description
Thesis
AMC June $1 strike puts are an attractive, loss-limited, way to bet on the normalization of equity trading dynamics in AMC’s capital structure following the collapse of the company’s dual share class structure. The opportunity exists because:
I believe there are reasonable scenarios for the puts to be worth 4x their current trading price. At a recent price of 15c, risk 15c to make up to 70c by June 16th, with favorable expected value and skew.
Situation background
On August 4, 2022, AMC announced a dividend of one APE preferred unit for each AMC share on August 19, 2022. APE was created as an end-run-around AMC reaching the upper limit of its share authorization as AMC shareholders repeatedly voted against increasing the AMC authorization. APE shares hold substantially the same voting and economic rights as AMC shares.